New Delhi: Market players on Thursday urged Finance Minister Nirmala Sitharaman to extend tax incentives to retail investors in corporate bonds, and also pitched for additional tax sops for investments in term insurance plans.

In the pre-budget meeting, financial and capital markets players made suggestions concerning infusion of capital in niche/regional banks, enhanced role of Financial Sector Development Council (FSDC) in the NBFC sector and creation of a dedicated liquidity window for NBFCs.

The Union Budget for 2019-20 is scheduled to be presented on 5 July.

"Discussed how to enhance corporate bond market. At present, retail investors invest through mutual funds. If some tax benefits can be extended to retail investors also, just like it has been extended to mutual funds, they would benefit. The corporate bond market would also gain," IDBI Bank CEO and MD Rakesh Sharma said.

Insurance Regulatory and Development Authority of India (Irdai) chairman Subhash Chandra Khuntia said he suggested additional tax incentives for term plans to encourage investments, like in the case of the National Pension Scheme (NPS).

Financial and capital market representatives also suggested review of interest rates on the government's small savings schemes, review of NPA provisions through setting up a committee, setting up of Debt Exchange Traded Fund (ETF), domestic capability building in audit and credit rating, rationalisation of various taxes such as the Security Transaction Tax (STT) in the capital market.

They also suggested setting up a separate bond exchange, allowing banks to invest in InvITs to access the broader market and make corporate tax progressive to incentivise the MSME sector, among others.

"Lots of suggestions have come regarding infrastructure financing, reviving the economy and what tax benefits can be given for encouraging investments in MSME, exports," SBI chairman Rajnish Kumar said.

Punjab National Bank MD and CEO Sunil Mehta said, "Liquidity is not a major challenge right now".

Discussion during the meeting also centred around issues relating to the capital market, the financial sector, non-banking financial companies (NBFCs) and Alternative Investment Funds (AIFs), among others.

The meeting was also attended by Minister of State for Finance Anurag Thakur, Finance Secretary Subhash Garg, Expenditure Secretary Girish Chandra Murmu, Revenue Secretary A B Pandey, Financial Services Secretary Rajeev Kumar, DIPAM Secretary Atanu Chakraborty, and other senior officials of the ministry.

Besides, RBI Deputy Governor N S Vishwanathan, Sebi Whole Time Member G Mahalingam, Kotak Mahindra Bank MD & CEO Uday Kotak, Central Bank of India MD & CEO Pallav Mohapatra, Punjab & Sind Bank MD & CEO S Harisankar, IDFC Bank MD & CEO V Vaidyanathan and other key stakeholders were also present in the meeting.

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