Budget 2026: BFSI Industry Seeks Refinancing Window, SARFAESI Relief For NBFCs

Finance Minister Nirmala Sitharaman's meeting with India Inc's BFSI heads has come to an end on Wednesday, with the industry seeking a refinancing window for non-banking entities, learnt NDTV Profit from people familiar with the matter.

Industry representatives also urged the government to lower the SARFAESI threshold for NBFCs to Rs 1 lakh, matching the limit applied to banks, highlighting that the current rule, which only covers NBFC loans above Rs 20 lakh, creates an uneven operating framework.

NBFCs further sought a TDS exemption on every repayment made to them, arguing that the existing levy adds to their compliance burden. The discussions also focused on improving credit flow to the MSME sector and resolving taxation-related challenges that continue to weigh on the industry.

Prominent capital-market participants had previously also put forward a set of key policy recommendations to the finance minister during the pre-Budget consultations, focusing on tax rationalisation and boosting household participation in equities, sources told NDTV Profit.

One of the core suggestions according to the sources was to ensure that the securities transaction tax (STT) on cash equity trades remains lower than on derivatives, to incentivise long-term investing over speculative activity.

Another major theme was the need to raise household savings in equities from the current 5% to 8%. The participants also called for a significant change in the buyback tax structure. They recommended that the tax be levied only on the profit component of a buyback rather than the entire amount, a shift they believe would encourage more companies to return capital to shareholders efficiently.

A notable disparity in tax treatment of dividends also came under scrutiny. Stakeholders proposed aligning the short-term dividend tax rate for domestic investors with that of NRIs, sources added. Currently, NRIs pay 20% on short-term dividends, whereas domestic investors can face rates of up to 42%, depending on their tax slab.

The Finance Ministry is expected to examine these suggestions as it finalises the Union Budget proposals.