Budget 2016: Gold loan should be brought under priority sector lending, says Muthoot Finance

The upcoming budget should have measures directed towards reinstating gold loan under priority sector lending to achieve Pradhan Mantri’s Jan Dhan Yojana vision, says Muthoot Finance. 

The Finance Minister, Arun Jaitley will be presenting Union Budget on February 29. 

While speaking to dna, George Alexander Muthoot, MD, of Muthoot Finance, said, "As financial empowerment through financial inclusion is one of the key mottos of the government, we expect that the budget will have measures directed towards reinstating gold loan under priority sector lending as we believe that gold loans can be a useful tool in achieving the objective of Pradhan Mantri’s Jan Dhan Yojana where more than 11 crore accounts have been opened".

Further, Muthoot said, "As NBFCs, specially gold loan NBFCs, are purveyors of credit to the sectors where credit gap exists and they facilitate the bottom of the pyramid by providing affordable, adequate and timely credit, measures to have a separate strong regulatory body for this sector may be realistic like NHB for Housing finance companies and NABARD for agriculture loan. This will boost the confidence of the investors as well as lenders and NBFCs will be able to raise funds cheaply which will ultimately result in cheap credit to the poor and needy and thereby, playing a crucial role in implementing many initiatives of the government targeted at financial inclusion of the masses".

" Recently, Service Tax on Money Transfer was introduced by the government which is a deterrent for NRIs who remit their funds to India and we expect that in this forthcoming budget, this may be withdrawn fully so as to encourage non-repatriable fund inflow to the country", he added.