Indian two thousand rupee banknotes are arranged for a photograph in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

More Banks May Buy Assets From NBFCs

More banks will join State Bank of India in increasing their planned purchases of assets from non-banking financial services companies, according to a senior government official, amid concerns over such lenders’ ability to refinance market debt.

A lot of other banks are also considering portfolio purchases from NBFCs and see this as a business opportunity, the official quoted earlier said. This is the time for the banks to realise there is an opportunity here, he said.

There were concerns that NBFCs will find it tough to refinance their market borrowings, which could severely impair their ability to grow. The risk emerged first out of tight liquidity conditions and then a trust deficit that hit the market after defaults by Infrastructure Leasing & Financial Services Ltd. and its subsidiaries.

SBI on Tuesday said it will increase its planned purchase of portfolios from NBFCs by Rs 20,000-30,000 crore. The nation’s largest lender initially planned additional purchases worth Rs 15,000 crore in the ongoing financial year.

NBFCs often sell part of their loan portfolios after holding them for a stipulated period. Banks, in turn, buy these to show growth or to meet priority sector lending requirements.

Also read: BQ Explains: Does SBI’s Purchase Of NBFC Loans Make Business Sense?

Revamping Task Force on Direct Tax Code

The government will reconstitute its task force on the Direct Tax Code as differences among members emerged during deliberations. The group will be reconstituted and a new chairperson may be appointed after the term of Arbind Modi ended as a member of Central Board of Direct Taxes, the official quoted earlier said. Some members of the task force may continue and some new will be inducted, he said.

The group was constituted in November 2017 and had to submit its report by August this year after it got an extension from the government. Its members included Girish Ahuja, non-official director of State Bank of India and a chartered accountant; Rajiv Memani, chairman and regional managing partner at EY; Mukesh Patel, tax lawyer; Mansi Kedia, consultant at Indian Council for Research on International Economic Relations; and GC Srivastava, retired Indian Revenue Service officer.

Also read: Will Strains Within The NBFC Sector Hurt The Flow Of Funds To The Economy?

NRI Deposits Being Considered

India will take more steps to help the weakening rupee and a widening current account deficit, the official said. All options, including a non-resident Indian deposit scheme similar to that the government introduced in 2013, are open, he said.

The local currency hit a new low today as capital outflows continue on expectations that the U.S. Federal Reserve will stay on course to increase interest rates. That added to the pressure on the currency from higher fuel prices, the nation’s largest import.

Also read: RBI To Tighten Asset-Liability Norms For NBFCs