In an aim to address the ailing Non-Banking Financial Corporations (NBFCs), Finance Minister Nirmala Sitharaman in her budget 2020 speech on Saturday has proposed a reduction in the NBFC’s limit for eligibility for debt recovery.
Under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002, the current eligibility limit is Rs.500 crore of asset size or loan size of Rs.1 crore. This limit has now been proposed to be reduced to Rs.100 crore of asset size of Rs.50 lakh loan size.
This reduction in limit would mean that now Non-Banking Financial Corporations debt recovery can enforce the security interest for lower ticket size loans. This is also expected to improve their ability to recover smaller loans and improve the financial health of NBFCs debt recovery with poor performing assets of lower value.
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