NPAs: NBFCs seek tax sops similar to financial institutions, banks
New Delhi: Non-banking finance companies have asked for tax sops similar to the ones extended to banks and financial institutions against provisioning done for non-performing assets (NPAs).

In a pre-Budget meeting with the finance minister, P. Chidambaram, the representatives of the Finance Industry Development Council (FIDC), a self-regulatory organisation, suggested that income-tax benefits, at par with banks and Fis, in the case of NPAs be granted to them as well, since such entities also comply with all the prudential norms prescribed by the Reserve Bank of India.

The group also sought income-tax benefits for infrastructure funding, as currently available to banks. Also, they said interest component in lease/hire purchase transactions should be exempted from the levy of service tax so as to bring it at par with the levy of service tax on loan transactions where interest component has been exempted.

The group also requested the Government to do away with the multiplicity of taxes on lease/hire purchase transactions. Such taxes, the FIDC has said, have crippled the use of hire purchase and leases as important modes of funding by making them economically unviable.

The FIDC has said that NBFCs should be permitted to raise long-term funds by external commercial borrowings through the automatic route.
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IBA to submit report on multiple BPLR this month
Mumbai: The Indian Banks' Association is likely to finalise its report on the multiple benchmark prime lending rate (BPLR) this month and submit it to the Reserve Bank of India.

The chief executive of IBA, H.N. Sinor, said, "We want to submit the report to RBI this month so that it can include the recommendations in the Annual Monetary Policy in April."

While banks want segment-wise pricing of credit, RBI is insisting on transparency in the system. Earlier, RBI had said increasing spreads between minimum and maximum lending rates were distorting the role of BPLR. Though sub-PLR lending has helped corporates raise funds at competitive rates from banks, it is distorting the role of BPLR itself, RBI had said.

The multiple BPLR system envisages separate BPLR for segments such as retail, agriculture, infrastructure and small and medium enterprises. Banks would be required to publish the rates on their Web site.
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Insurance broking business sees shakeout
Coimbatore: Brokers in the insurance broking business are seeing a shakeout just three years since the commencement of the industry.

According to an IRDA progress report on the status of the industry, the number of licences (for insurance brokers) has been declining sharply in the last three years from 138 in 2003 to 48 in 2004 and further down to 26 in 2005. The number of licensed brokers stands at 212 at present of which 181 are into direct broking, four in re-insurance and 27 in composite broking.
No re-insurance licence has been issued after 2003. Even the number of composite licences has dropped steadily from 22 in 2003, four in 2004 to just one in 2005.

Insurance broking firm, India Insure Risk Management Services has attributed the steady drop in the number of aspirants to a progressively stricter process followed by the regulatory authority.

A region-wise analysis of licensed brokers shows that the West leads with 81 licences, followed by North at 72 and South and East at 43 and 16 respectively.
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