April 28, 1998
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Sinha seeks suggestions from FIs to revive India Inc
Financial Minister Yashwant Sinha on Monday met representatives of financial institutions and financial markets
and stressed the need to reinvigorate the primary capital market and
the importance of creating confidence among investors.
In his introductory remarks, the finance minister drew their attention
to some of the key challenges facing the economy, including the need
to revive industry and agriculture, reinvigorate
export growth, contain fiscal deficit and improve the health of
capital markets.
Welcoming suggestions from participants in this regard, Sinha
referred to high-level committee reports on different aspects of the
financial sector, which had been presented recently, and sought their
views.
In this connection, he mentioned that during his recent visit
abroad, investors in the US and the UK had evinced strong interest in India.
Among the points/suggestions made by the participants were the
following:
Tax treatment of provisioning for non-performing assets of
banks should be made more liberal, particularly with respect
to provisioning in the case of rural credit.
The fiscal deficit should be reduced to help
bring down interest rates.
Disinvestment should be actively pursued with discounts for
retail investors.
Buy-back of shares by companies should be allowed.
NBFCs which meet RBI guidelines should be treated on par with
banks as regards TDS and tax provisioning rules.
Development of debt market should be encouraged.
Retail market for government securities must be consciously
developed.
To foster a lower interest rate structure, interest rates on
bank deposits, small saving instruments and Provident Fund needs to
be reduced.
There must be a massive revamp of technology in the banking
system. Minimum standards should be mandated and fiscal concessions
may be considered.
Leasing has become very important for investment, and various
policies need to be liberalised to encourage more leasing
activities.
Investment pattern of Provident Fund should be changed to allow
investment in equity instruments.
Long-term capital gains for Indian institutions should be
brought on par with the concessional rate for foreign institutional
investors.
Fiscal incentives for savings should be strengthened.
Measures are necessary for encouraging mutual funds.
Restore Secton 80cc for primary issues and reintroduce Section
80m.
Remove service tax on brokers.
Modify Stamp Act to facilitate paperless trading in debt
instruments in the depository.
Promote housing finance and investment to give a boost to the
economy.
Liberalise bank lending against shares to facilitate
acquisition of shares by promoters.
Undertake measures to encourage more primary issues in the
capital market.
The experts who participated in
the meeting were S H Khan, Uday Kotak, Udayan Bose,
Jamal Mecklai, M S Verma, Pradip Shah, Dr R H Patil, T R
Sridharan, Jasvantlal C Parekh, Solomon Raj, Hemendra
Kothari, Moinul Hassan, G P Gupta and Farooq Irani.
UNI
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