• Presently institutions such as banks and insurance companies are categorized as Qualified Institutional Buyers (QIBs) by SEBI. They are eligible for participation in IPOs with specifically earmarked allocations. It is now proposed to allow systemically important NBFCs regulated by RBI and above a certain net worth, to be categorized as QIBs. This will strengthen the IPO market and channelize more investments.
• Lending target under Pradhan Mantri Mudra Yojana to be set at Rs 2.44 lakh crore. Priority will be given to Dalits, Tribals, Backward Classes and Women.
• Affordable housing to be given infrastructure status. Allocation for Pradhan Mantri Awaas Yojana – Gramin has been raised sharply from Rs 15000 crore in 2016-17 to Rs 23000 crore in 2017-18.
• National Housing Bank will refinance individual housing loans of about Rs 20000 crore in 2017-18.
• Listing and trading of Security Receipts issued by a securitization company or a reconstruction company under the SARFAESI Act will be permitted in SEBI registered stock exchanges. This will enhance capital flows into the securitization industry and will particularly be helpful to deal with bank NPAs.
• Government is considering introduction of legislative changes, or even a new law, to confiscate the assets of such persons located within the country, till they submit to the jurisdiction of the appropriate legal forum.
• Net market borrowing of Government is estimated at Rs 3.48 lakh crore in 2017-18, much lower than Rs 4.25 lakh crore in 2016-17.
• Foreign Investment Promotion Board to be abolished in 2017-18 and further liberalization of FDI policy is under consideration.
• The commodities and securities derivative markets will be further integrated by integrating the participants, brokers, and operational frameworks.
• The process of registration of financial market intermediaries like mutual funds, brokers, portfolio managers, etc. will be made fully online by SEBI. This will improve ease of doing business.
• A common application form for registration, opening of bank and demat accounts, and issue of PAN will be introduced for Foreign Portfolio Investors (FPIs). SEBI, RBI and CBDT will jointly put in place the necessary systems and procedures. This will greatly enhance operational flexibility and ease of access to Indian capital markets.
• Steps will be taken for linking of individual demat accounts with Aadhar.

Stocks to watch

HDFC, LIC Housing Finance, Mahindra and Mahindra Financial Services, Indiabulls Housing Finance, Bharat Financial Inclusion,

Outlook

The Union Budget 2017-18 has unmet the NBFCs sector demand of parity with the bank system, by providing higher deduction for NPA provisions, while extending the benefit to housing finance companies. However, the systemically important NBFCs regulated by RBI and above a certain net worth, would be categorized as Qualified Institutional Buyers (QIBs) at par with banks and insurance companies, making them eligible for participation in IPOs with specifically earmarked allocations. The move would help NBFCs to channelize their funds for optimizing the treasury performance.