Expansion of microfinance equity fund, exemptions in taxes and tabling of microfinance bill top the wish-list of microfinance institutions in the forthcoming Budget for 2012-13.
“More than anything else, we hope that the Microfinance Bill will be tabled in the Budget session, though it is not part of the Budget,” Mr Alok Prasad, Chief Executive Officer, Microfinance Institutions Network, told Business Line on Friday.
The Microfinance Equity Fund was set up with an announcement in last year's budget and a corpus of Rs-100 crore has been provided with the Small Industries Development Bank of India.
On the tax front, MFIs were seeking inclusion of NBFC-MFIs in Section 36(1) (viia) of the Income-Tax Act and tax-exemption, according to MFIN.
Level-playing field
“This will give MFIs a level playing field with banks and housing finance companies,” Mr S. Dilli Raj, Chief Financial Officer, SKS Microfinance Ltd, said.
To facilitate build-up of reserves, NBFC-MFIs could be allowed, like housing finance companies and infrastructure companies, tax concessions to the extent of 40 per cent of their profits, he added.
As the low-income group pays a ‘poverty premium' in the form of service tax on whatever little financial services reach them, NBFC-MFIs should also be included as eligible institutions for remission of service tax on micro-loans and sale of insurance products, Mr Dilli Raj said.
A blanket waiver of stamp duty on all deeds of hypothecation to be executed by microfinance institutions registered with the Reserve Bank of India would also reduce cost of delivery of financial products, feel MFIs.