Budget 2019 expectations: Banking, finance sector demand incentives, alternate mechanism for KYC authentication
The barring of private companies from using Aadhaar for KYC authentication has increased compliance cost.
Budget 2019 demands: The banking and financial sector in India has demanded incentives and an alternate mechanism for KYC authentication from the Narendra Modi government when his Finance Minister Arun Jaitley when the Indian budget gets presented in parliament on February 1. They said current KYC norms enhances the compliance cost of the banks, which is leading to the lowering of loan disbursal by various Indian banks. They said coming budget would be an ideal occasion to meet their age-old demand.
Dr. Arun Singh, Lead Economist at Dun and Bradstreet told Zee Business online, "The barring of private companies from using Aadhaar for KYC authentication has increased compliance cost. We expect the budget to provide some incentives to the banking and financial industry to come up with an alternate mechanism to authenticate their customers online. Further, we also expect the government to propose plans for centralisation of compliance processes in order to lower compliance costs."
Bhupinder Singh, Founder and CEO at Incred told Zee Business online, "Today, leading NBFCs draw power from cutting-edge technologies. Their advanced approach has enabled them to decrease their TAT (turnaround time) in loan processing while also ensuring that the NPAs remain considerably low and diminish progressively. NBFCs have increased their overall market share in MSME credit by around 17 per cent year-on-year till a mid-last year, whereas private sector bank's share only increased by 6.4 per cent and public sector bank's decreased by around 9 per cent. Similar results can be seen in consumer credit. Having said that, we strongly believe that the budget should have some subsidies for the MSME segment and credit support to enable them to continue growing and borrow effectively for that. It will help in bridging the prevailing credit gap and acquaint our nation with experience superior growth rate while tangibly increasing the employment opportunities."