Home, vehicle, other retail loans to become cheaper, says FinMin

GDP, slowdown, Nirmala Sitharaman, World Economic Outlook, International Monetary Fund, Consumer Price Index, inflation
Data is either limited to a short period of time or doesn’t cover all important aspects of the economy to begin the celebrations just yet. Photo: PTI.

The government on Thursday (August 23) announced a slew of measures to ensure that loans for home, vehicles and consumption goods become cheaper and widely available through banking and non-banking finance companies.

Addressing the media here, Finance Minister Nirmala Sitharaman also said that banks will pass on RBI rate cut benefits to borrowers through MCLR reduction.

She said that banks will launch repo rate and external benchmark-linked loan products that will lead to reduced easy monthly installments for housing, vehicle and other retail loans.

The minister also announced additional liquidity support of ₹20,000 crore to housing finance companies (HFCs) by the National Housing Bank (NHB), thereby increasing the total support to ₹30,000 crore.

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The government announced partial credit scheme for purchase of pooled assets of non-banking finance companies and HFCs up to ₹1 lakh crore to be monitored at highest level in each bank.

Prepayment notices issued to NBFCs will be monitored by banks. The minister said that NBFCs will be permitted to use the Aadhaar authenticated bank Know Your Customer (KYC) to avoid repeated processes.

The government has decided to make necessary changes in PMLA rules and Aadhaar regulations to ease the lending process.

“Working capital loans for industry will also become cheaper,” Sitharaman said. To reduce harassment and bring in greater efficiency, public sector banks (PSBs) will ensure mandated return of loan documents within 15 days of loan closure. “This will benefit borrowers who have mortgaged assets,” Sitharaman said.

Meanwhile, in a major relief to the MSME sector facing liquidity shortage, the government announced that all their pending GST refunds will be paid within 30 days.

Also, in future, all GST refunds of micro, small and medium enterprises (MSMEs) will be paid within 60 days from the date of application, Sitharaman said, while announcing a slew of measures to boost growth.

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The minister also said the decision on recommendations of the UK Sinha Committee regarding ease of credit, marketing, technology and delayed payments to MSMEs will be taken within 30 days.

The government would also consider amendment to the MSME Act to move towards a single definition. The MSME sector, which accounts for about 29 per cent of the gross domestic product (GDP), is one of the largest job creators in the country.

Allaying industry concerns, Sitharaman said that violations of CSR norms under the companies law will be treated only as a civil liability and not as a criminal offence. The corporate affairs ministry would review the sections concerned under the Companies Act, she said.

Industry has expressed concerns over penal provisions for non-compliance with Corporate Social Responsibility (CSR) requirements in the amended Companies Act, 2013.

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“CSR violations… not be be treated as criminal offence and will be civil liability,” Sitharaman, who also holds the charge of the corporate affairs ministry, said.

The government has provided companies through revised orders more time for completing ongoing projects as part of their CSR obligations.

Under the Act, certain class of profitable companies are required to shell out at least two per cent of their three-year annual average net profit towards CSR activities.

To address concerns over alleged harassment of taxpayers, Sitharaman said it has been decided that from October 1, all notices, summons, and orders of the Income Tax Department would be issued through a centralised computer system and would also have a a computer generated unique Document Identification Number.