'Extend tax sops to retail investors in corporate bond'

Financial market players on Thursday urged Finance Minister Nirmala Sitharaman to extend tax incentives to retail investors in corporate bonds, and also pitched for additional tax sops for investments in term insurance plans.

In the pre-budget meeting, financial and capital markets players made suggestions concerning the infusion of capital in niche/regional banks, the enhanced role of Financial Sector Development Council (FSDC) in the NBFC sector and creation of dedicated liquidity window for NBFCs.

The Union Budget for 2019-20 is scheduled to be presented on July 5.

"Discussed how to enhance corporate bond market. At present retail investors invest through mutual funds. If some tax benefits can be extended to retail investors also, just like it has extended to mutual funds, they would benefit and corporate bond market," IDBI Bank CEO and MD Rakesh Sharma told reporters here after the meeting.

Insurance Regulatory and Development Authority of India (Irdai) Chairman Subhash Chandra Khuntia said that he suggested additional tax incentives for term plans to encourage investments, like in the case of National Pension Scheme (NPS).

The financial and capital market representatives also suggested review of interest rates on government's small savings schemes, review of banking NPAs provisions through setting-up a committee, setting-up of Debt Exchange Traded Fund (ETF), domestic capability building in audit and credit rating, rationalisation of various taxes like Security Transaction Tax (STT) in capital market.

They also urged to set up a separate bond exchange, allowing banks to invest in InvITs to access broader market and make the corporate tax progressive to incentivise MSME sector, among others.

SBI Chairman Rajnish Kumar said, "lot of suggestions have come regarding infrastructure financing, reviving the economy and what tax benefits can be given for encouraging investments in MSME, exports".

Punjab National Bank MD and CEO Sunil Mehta said, "Liquidity is not a major challenge right now".

Discussion during the meeting also centered around issues relating to the capital markets, financial sector, non-banking financial companies (NBFCs) and Alternative Investment Funds (AIFs) among others.

The meeting was also attended by Minister of State for Finance Anurag Thakur, Finance Secretary Subhash Garg, Expenditure Secretary Girish Chandra Murmu, Revenue Secretary A B Pandey, Financial Services Secretary Rajeev Kumar, DIPAM Secretary Atanu Chakraborty, and other senior officials of the ministry.

Besides, RBI Deputy Governor N S Vishwanathan, Sebi Whole Time Member G Mahalingam, Kotak Mahindra Bank MD & CEO Uday Kotak, Central Bank of India MD & CEO Pallav Mohapatra, Punjab & Sind Bank MD & CEO S Harisankar, IDFC Bank MD & CEO V Vaidyanathan and other key stakeholders were also present in the meeting.