Categories: Business

Govt launches special liquidity scheme for non-bank lenders


Special scheme for NBFC

new Delhi. The Reserve Bank of India said on Wednesday that the government has approved a scheme under which eligible non-banking lenders will be given short-term cash through a special purpose vehicle set up by SBI Cap. SBI Cap is a subsidiary of State Bank of India. Under the special cash scheme, the SPV will purchase short-term debt instruments from eligible non-banking financial companies (NBFCs) or housing finance companies (HFCs).

The funds received under this scheme will be used to eliminate current liabilities. RBI said that the Government of India approved the scheme to improve the cash position of NBFCs or HFCs through an SPV to avoid any potential systemic risk in the financial sector. RBI said that commercial paper (CP) and non-convertible debentures (NCDs) would be used for this, whose maturity period would not exceed three months. However, the facility will not be available for any letter issued after 30 September 2020 and the SPV will not make a new purchase after 30 September 2020 and recover the entire arrears by 31 December 2020.

Housing finance companies and NBFCs registered under National Housing Bank Act can avail this special cash scheme. The statement said that their total non-performing assets (NPAs) should not exceed six percent by March 31, 2019 to take advantage of the scheme and at least in the last two financial years (2017-18 and 2018-19) They should have profits in a lesser one.

This post was published on July 1, 2020 11:41 pm

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