Treading with a steep rise in NPAs, slowdown in loan growth and elevated funding costs amid a stringent regulatory environment, CII has suggested a 5 point agenda to steer the NBFC sector on its revival path for orderly growth and further increase its contribution to the Indian economy.

While the NBFCs Assets as a percentage to GDP has increased from 8.4% in 2006 to 12.5% in 2013, the NBFC sector has a share of just 8% in the total financial sector assets of the Indian economy. A focused long term vision with specific milestones and roadmap should be laid out to increase the share of NBFC sector for the broad-based development of the Indian financial sector, said CII.

Calling for a long-term vision for the development of the NBFC sector in India, CII has suggested a 5 point agenda for consideration of the Ministry of Finance and the Reserve Bank of India. The agenda focuses upon:

1.Meeting the funding requirement of the sector adequately

2.Maintaining the existing NPA classification norms

3.Bringing NBFC sector under the ambit of the SARFAESI Act

4.Addressing concerns on Capital Adequacy requirement

5.Resolving tax related issues

CII feels that a robust NBFC sector is critical to supplement the banking sector to meet the funding needs of the economy. Given that bank assets as a percentage to GDP is approaching 100% mark, NBFC sector has a tremendous potential to scale up and increase its contribution to the Indian economy. Globally also, the NBFC sector is accorded great importance and has even surpassed the size of GDP in developed economies including the US, the UK and the Euro Area.

"The NBFC sector needs to be integrated to the core of Indian financial system with adequate policy support to help meet the financing needs of the economy and achieve the financial inclusion agenda. Clarity on the policy road-map for the NBFC sector for the next 10 years would promote systematic and organized development of the sector," said Chandrajit Banerjee, director general, CII.