New Delhi (The Hawk): Recommendations by a committee of Reserve Bank of India (RBI) for conversion of large Non-Banking-Finance-Companies (NBFCs) into banks is a practical one, and should be accepted by the central government. Presently NBFCs are mainly funded by public-sector banks. Converting large ones into banks will make them take deposits from public thus avoiding dependence on public-sector banks for being financed for their loan-business. However necessary regulations should be made by RBI on such new created (and also existing ones) private banks to check them meet fate like those of PMC Bank, Luxmi Vilas Bank and YES Bank making it compulsory for all accounts and deposits of central and state governments together with those of their undertakings only in public-sector banks.
At the same time since NBFCs also perform banking-business in giving loans, interest received by NBFCs on Equated Monthly Installments (EMIs) should be exempted from provision of Tax-Deducted-At-Source (TDS). Presently loan-takers have to first pay full interest-portion in EMIs, then pay TDS and afterwards claiming TDS from NBFCs with most of loan-takers not claiming back TDS from NBFCs due to the cumbersome procedure resulting in left-back TDS as extra income of NBFCs.