Mumbai, Dec. 20 :    Mumbai, Dec. 20:  The Reserve Bank of India (RBI) is considering a proposal to widen the definition of hire-purchase companies, to cover those that extend loans. The move will the give non-banking finance companies (NBFCs) a breather from the 5 per cent service tax clamped by the government. The difference between loan assets and lease-and-hire purchase assets is that in case of the former, the ownership of an asset for which the loan is taken lies with the borrower. However, in case of lease and hire purchase, the ownership lies with the financier. Recently, NBFCs began to cry foul over the 5 per cent service tax levied on the interest component on lease-and-hire purchase transactions. Apart from the levy, the main grouse of the NBFCs was that loan assets were exempted from the ambit of this service tax and this worked out to the advantage of the banking sector vis-a-vis the NBFCs. According to Mahesh Thakkar, special executive officer, Association of Leasing and Financial Service Companies, even if an NBFC were to give more prominence to loan assets and include it within their overall asset portfolio, they are at a disadvantage. This is because as per the current RBI regulations, NBFCs must have at least 60 per cent of their assets in lease and hire purchase categories. Loan assets are not included in this category. NBFCs that meet this stipulation are permitted to borrow four times their net-owned funds. 'The RBI is now widening the definition of hire and lease purchase companies and is considering a proposal to include loan assets apart from hire-and-lease purchase assets,' sources averred. Earlier, the government had widened the scope of the service tax and brought services such as financial leasing, hire purchase apart from others such as credit card, merchant banking and forex broking under its ambit. Following this, the NBFCs had urged the government that the tax be levied on management fees or the service components and not on the interest or principal segments, as in the case of latter, loans would become more costlier. Though this issue has been challenged in the courts, NBFCs say industry would be hit if the tax were to be applicable as the economic slump has resulted in a decline in disbursements.