Budget 2024: Demand for creation of new NBFC-PSL category to boost MSME

The creation of a new category of Non-Banking Financial Companies (NBFCs) dedicated to priority sector lending (PSL) to support the growth of MSMEs features among the key demands by business leaders in the forthcoming Union Budget.

Finance Minister Nirmala Sitharaman will present the Union Budget in Parliament on Tuesday.

Shachindra Nath, Founder & MD of UGRO Capital Ltd, urged the government to address specific challenges faced by NBFCs that cater to the Micro, Small, and Medium Enterprises (MSMEs).

He called for the establishment of NBFC-PSL, which would focus at least 85 per cent of their assets under management (AUM) on the priority sector.

"Creating an NBFC-PSL category will foster a more inclusive and resilient financial ecosystem for MSMEs," Nath told PTI.

He said loans from banks to NBFCs for onward lending to MSMEs should be classified as PSL loans', with current caps removed.

Nath also proposed reintroducing the Partial Credit Guarantee Scheme and expanding it to includ