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Informist, Wednesday, Nov. 19, 2025

 

By Priyasmita Dutta

 

NEW DELHI – Non-banking financial institutions have sought parity with banks on several regulatory fronts, including tax treatment of fixed deposits for senior citizens, easier access to liquidity, and amendments to debt recovery laws in the Budget for 2026-27 (Apr-Mar). Most of their demands--presented to Finance Minister Nirmala Sitharaman Wednesday--are a repetition of what they had sought in full Budget for FY25.

 

According to officials part of the meeting, NBFCs urged the government to allow exemption from tax deduction at source on interest earned from fixed deposits held by senior citizens--on a par with bank deposits. They also pitched for NBFCs to be notified for deduction in taxable income under section 80E of the Income Tax Act, 1961, allow individual taxpayers in India to claim a deduction on the entire interest portion of an educational loan. The deduction is available for a maximum of eight years or until the interest is fully repaid, whichever is earlier. 

 

For better liquidity, NBFCs sought dedicated refinance window like that of National Housing Bank in the upcoming Budget, officials said. This is another request that was already made to the finance minister earlier. The National Housing Bank provides a refinance window to eligible institutions like banks and housing finance companies to provide liquidity for housing loans, especially in the affordable housing sector.

 

NBFCs also demanded for the removal of the INR 2 million minimum threshold under the SARFAESI Act for initiating debt recovery to INR 1 million. The current limit, they said, restricts recovery from small-ticket defaulters and limits their ability to manage non-performing assets effectively. This, however, could lead to a spike in litigation, burdening debt recovery tribunals with a higher volume of cases.

 

NBFCs play a critical role in India's financial sector, especially for small borrowers and underserved segments. But despite their growing role, they continue to face regulatory and structural constraints compared with banks. The industry wanted adequate-but-not-extra guardrails to better serve India's growing credit need, an official said.  End

 

Edited by Akul Nishant Akhoury

 

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