Budget 2019 at a glance

Retail investors seeking safety would be better off if the proposal to boost their participation in the government bond market takes off.

Budget 2019: 10 key takeaways from Nirmala Sitharaman's budget speech
REDUCING COSTS
Easy Fund-raising for NBFCs
The government will do away with the debenture redemption reserve (DRR) requirement for non-banking finance companies (NBFCs) raising public funds and help reduce their overall costs. Currently, NBFCs raising public funds have to set aside 25% of the proceeds as DRR. This would bring public issuances of NBFC bonds on a par with private placements.

BETTER ACCESS

Tech- and Customer-friendly
State-run banks are not only starved of capital and saddled with bad loans, they are also behind private sector peers on technology. This budget focuses on improving their technology backbone. These banks will leverage technology to offer online personal loans and doorstep banking, and enable customers of one state-run lender to access services across all state-run banks, the finance minister said. In addition, the government will initiate steps to empower account holders to remedy the current situation where they do not have control over cash deposits by others into their accounts.

FEDERAL GOAL
Panel to Study DFI Feasibility
As development finance institutions (DFI) — IDBI and ICICI — ended their innings, realising that there is no future in such a role. The Centre has now proposed to set up an expert committee to study the situation relating to long-term finance, and the experience with DFIs. The committee will recommend the structure and required flow of funds through DFIs to help achieve the federal objective of investing Rs 100 lakh crore in infra over the next five years.
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ALL INCLUSIVE
Retail Investors in Govt Bonds
Retail investors seeking safety would be better off if the proposal to boost their participation in the government bond market takes off. Banks and primary dealers hold G-secs and T- bills. Individuals do so with the National Securities Depository and the Central Depository Services. This reduces liquidity and makes it hard for retail investors to participate. The Centre has proposed that RBI depository and other depositories have interoperability, enhancing the opportunity for retail investors to participate.

SAFETY NET
TDS on Net Earnings Only
Savings through insurance have always been preferred by those seeking safety. While the safety remains, it would get more attractive with lower tax deducted at source. The budget proposes to impose TDS of 5% on net proceeds, that is, total sum received minus premium paid by policyholders against 1% on gross payouts at present.
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CAPITAL BOOST
FII Limit in Insurance Intermediaries Raised to 100%
The insurance industry may soon see an influx of foreign capital as the government has increased foreign investment limit in insurance intermediaries to 100% from 49%. Move is set to bring in capital for companies investing in tech solutions that would help the industry to widen reach. The government is also reducing net owned fund requirement for reinsurers to Rs 1,000 crore from Rs 5,000 crore to attract global re-insurers.
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