Our correspondent Rajat Mishra interviewed TT. Srinivasaraghvan, MD, Sundaram Finance about the crisis NBFCs are reeling under and how announcements made in budget are going to affect the NBFCs.
#NBFC #Budget2019 #TTSrinivasaraghvan #Money #OutlookMoney #OutlookMagazine #OutlookGroup #Interview
#NBFC #Budget2019 #TTSrinivasaraghvan #Money #OutlookMoney #OutlookMagazine #OutlookGroup #Interview
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NewsTranscript
00:00 The first question that I would like to ask you is, belonging to this NBFC which plays
00:04 a very vital role in the flourishing economy, do you think that this budget has lived up
00:09 to the expectation of the NBFC sector?
00:11 Well, I don't know about lived up to the expectation but I think the budget has some very huge
00:17 positives for the NBFC sector.
00:20 First of all, I think is the vote of confidence from the Honourable Finance Minister acknowledging
00:27 the role that NBFCs have played and continue to play.
00:31 So that itself I think was a very major step, positive step.
00:38 And then of course there were specifics in terms of the 1 lakh crore first loss guarantee
00:45 which the government said they will pick up 10%.
00:48 Then there was also some changes on the taxation side.
00:51 So overall I would say after a long time the Finance Minister has sort of focused specifically
00:59 on the NBFC sector.
01:01 So overall we would say very positive.
01:04 So as the theme of this entire conference is that there are some unfinished agendas.
01:08 So can you throw light on those unfinished agendas?
01:11 Yeah, the major part of the unfinished agenda is to make sure that there is an institutionalised
01:17 framework to support the growth of NBFCs.
01:21 Because as I think has been repeatedly said, the last mile credit delivery in this country,
01:28 especially to small businesses, small traders, small transport operators, that is essentially
01:34 done by the NBFC sector.
01:37 And for the economy to grow, and ours is a consumption driven economy, and for the economy
01:43 to grow you need a robust banking sector, you also need a robust NBFC sector.
01:48 So essentially what we are saying is that this is a relationship of a wholesaler and
01:54 a retailer.
01:55 The banks are the wholesalers, the NBFCs are the retailers.
01:58 So if there is a good institutional framework whereby credit can be delivered to the last
02:05 mile, it's overall good for the economy.
02:07 I don't think we should just make this about what's good for the NBFCs.
02:11 I think it is more about what's good for the overall economy, for growth of the automotive
02:16 sector, for growth of MSMEs, that whole thing.
02:20 And NBFCs play an important role in that growth.
02:23 So I think that's the perspective in which we need to appreciate this.
02:27 Sir, moving on to the next part, the entire crisis was started after the IN and FS defaulting
02:32 in September and after that the Diwan housing and finance limit.
02:35 So how do you see this?
02:36 And you, like in this meeting, that one fact came out is that we can't generalise this
02:41 crisis.
02:42 Can you throw light on that?
02:43 No, no, absolutely.
02:44 You said it yourself.
02:45 I mean, ILFS happened in, I think, August or September 2018.
02:50 We are now almost at the end of July 2019.
02:52 We are still talking only about the same two names, ILFS, DHFL, ILFS, DHFL.
02:59 So you please tell me, there are nearly 10,000 NBFCs.
03:02 Have you heard any other name defaulting?
03:05 So I think you have answered your own question.
03:08 Essentially, this was a problem concerning two entities.
03:13 Please fix those entities.
03:14 You know, don't condemn a whole sector because two people did something wrong.
03:20 So that is the answer.
03:22 The fact that nobody else has gone into default, the fact that no one else has created any
03:28 other problem, itself is the answer to your question.
03:31 So what are your future expectations?
03:33 What would you like to want the government to do?
03:35 Well, we would like this confusion and some of this negative sentiment towards NBFCs to
03:44 settle down very quickly so that people can get on.
03:47 NBFCs can get on.
03:48 The rest of the economy can get on.
03:51 And all the segments of the economy that we serve, they can also get on with it.
03:55 So that is our expectation.
03:58 And hopefully it happens sooner than later.
04:00 Thank you.
04:01 Thanks.
04:02 Thanks very much.
04:03 Thank you.
04:03 (upbeat music)
04:06 (birds chirping)