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Financial market seeks incentives for NBFCs, AIFs in pre-Budget meeting | Budget 2024 News

Union Minister for Finance & Corporate Affairs Nirmala Sitharaman chaired a pre-budget consultation meeting with industry leaders and associations in connection with the Union Budget 2024-25 in New Delhi on Thursday, June 20, 2024. A group of financial and capital markets players met with Sitharaman and put forth various demands, including reducing the reliance of non-banking financial companies (NBFCs) on bank funding.

Raman Agarwal, Co-Chairman of the Finance Industry Development Council, suggested that the Small Industries Development Bank of India (SIDBI) should allocate funds to support NBFCs. He emphasized the need to address anomalies in the recovery process faced by NBFCs.

Representatives from the mutual fund industry and market participants also requested Sitharaman to revisit the safe harbour clause under Section 9A of the Income Tax Act. They highlighted instances where offshore players made significant profits through algorithmic trading in options.

During the meeting, concerns were raised about the impact of foreign entities like Jane Street, a US-based hedge fund, on the Indian market. Participants suggested imposing higher taxes on such entities to prevent capital outflows and protect retail traders.

Nilesh Shah, Managing Director of Kotak Mahindra Asset Management Company, requested the finance minister to launch a campaign for financial inclusion to help millions of Indians currently involved in Ponzi schemes and speculations.

Additionally, Ashley Menezes, Chairman of the Indian Venture and Alternate Capital Association (IVCA), suggested mainstreaming AIF investments and involving domestic capital pools like insurance and pension funds to finance infrastructure projects, start-ups, scale-ups, and growth companies.

Overall, the industry participants stressed the importance of stable and long-term tax policies, fiscal discipline, and providing tax incentives to deepen the market. The meeting was attended by finance ministry secretaries and senior officials, reflecting a collaborative effort to address the various challenges and opportunities in the financial and capital markets sector. The industry also urged the government to operationalize the recommendations of the Expert Committee on private equity and venture capital for industry growth acceleration.

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