PTI Feb 28, 2015, 04.34PM IST

(Currently, NBFCs can only)

MUMBAI: Large non-banking financial companies (NBFCs) have hailed the Budget proposal to include them under the Sarfaesi Act, as it will expedite the loan recovery process and help contain bad debt in the system.

Finance Minister Arun Jaitley presenting his first full Budget today said, "It is proposed that NBFCs registered with the RBI and having asset size of Rs 500 crore and above will be considered for notifications as 'financial institution' in terms of the Sarfaesi Act, 2002."

He said the move will bring parity in regulation of NBFCs with other financial institutions in matters relating to recovery.

"Including large NBFCs under the Sarfaesi Act are structural changes that will improve the viability of these growing intermediaries," Ananda Bhoumik, senior director (banks and FIs) at India Ratings said.

The Sarfaesi Act will enable large NBFCs to fund SME and mid-corporate businesses with lower loss prospects, he added.

IDFC managing director and CEO Vikram Limaye said, "This move is positive as NBFCs also require to excercise security. It will help them to recover their loans."

Currently, NBFCs can only approach the civil courts to recover loans from the borrowers, which usually use to take longer time.

"Earlier, to recover loans it used to take 2-2.5 years as legal processes take long time. This move will accelerate the recovery process and will bring down the NPA recovery time to 6-8 months," Kavi Arora, CEO of Religare Finvest, the NBFC arm of Religare Group said.

See the rest here:
'Move to bring NBFCs in Sarfaesi Act for recovery beneficial'