FM Announced Steps for Boosting Digital Transactions

NEW DELHI: Union Finance Minister, Nirmala Sitharaman here today discussed banking issues with chiefs of Public Sector Banks (PSBs), chief executive of Indian Banks' Association and representatives of leading private sector banks. Finance Secretary, Revenue Secretary, Economic Affairs Secretary, Electronics and Information Technology Secretary, CBI Director, RBI representative and the chief executive officer of NPCI were also present.



In order to strengthen the digital payment eco-system and move towards less-cash economy, Hon'ble FM in her budget speech of 2019-20 had, inter alia, announced that business establishments with annual turnover of more than Rs. 50 crore shall offer low cost digital modes of payment ( such as BHIM UPI, UPI QR Code, Aadhaar Pay, Debit Cards, NEFT, RTGS etc.) to their customers, and no charge or Merchant discount rates (MDR) shall be imposed on customers as well as merchants. To facilitate implementation of this announcement, it was decided as under:


Post IL&FS default, aided significantly by Government support, assets of NBFCs have grown by 12.83% from Rs 28.31 lakh crore to Rs 31.94 lakh crore, and assets of the 211 larger NBFCs with 81% of market share have grown at an even higher rate of 19.69%. Bank exposure to NBFCs has grown at a much higher rate of 17.46% as compared to market financing.


Similarly, 76 out of 101 HFCs with 82% of market share have shown a positive asset growth of 18% post IL&FS default from Rs 8.45 lakh crore to Rs 10 lakh crore. Exposure of banks and NHB to the 76 performing HFCs has grown by 38% post IL&FS default, as compared to 14% growth in market financing to these HFCs..


Thus, the NBFC/HFC sector post IL&FS default, is now stabilizing and good NBFCs/HFCs are able to raise funds from market even at times at rates less than the pre-IL&FS rates. The market is, however, distinguishing between good and not-so-good entities which is reflected in the better entities being able to obtain higher financing from both banks and the market.