|
AL&FS
taps RBI to extend benefit to loan transactions
Srikesh P Menon
Mumbai, Dec 10: The Association
of Leasing & Financial Services Companies (AL&FS)
has requested the Reserve Bank of India (RBI) for treating
loans against hypothecation of assets along with equipment
leasing and hire purchase assets for the purpose of satisfying
the norm of 60 per cent of the total assets and the total
income to get the status of equipment leasing or hire purchase
(EL/HP) company.
“The main reason for us to make this request
is to allow NBFCs to get level-playing field as we face the
disadvantage of being applicable of being taxed if we process
loans more than 60 per cent of the total assets and total
income, we lose the recognition of being a EL/HP company,”
said AL&FS’s executive director, Mr Mahesh Thakkar.
EL/HP transactions are subject to service
tax of five per cent for interest portion and sales tax ranging
for two to 12 per cent, according to states. This in turn
ncrease the overall cost of borrowing to the end customer.
“Due to taxes, customers have to pay higher
interest for their loan, so why should they come to us when
they can get their loans from elsewhere as a loan which is
much cheaper for them as loans do not come under the tax bracket,”
Mr Thakkar pointed out. “We have approached the RBI and they
are taking active consideration of this proposal,” added Mr
Thakkar.
Further, AL&FS has also asked the RBI
for permission to hold SLR securities with depository participants
in electronic form.
Explaining this, Mr Thakkar said “the handling
of securities in demat form has a host of advantages which
are relevant to the concerns of RBI. The charge created, if
any, by the owner against the securities is captured electronically
and the electronic system allows the owner of the securities
know the balances without any delay and the value of the securities
is also ascertainable with out any difficulty.”
This system would be advantageous to companies
because they would save on avoidable manual work and the savings
in service charges from banks.
|
