15 Proposals worth Rs 6400 Cr Sanctioned for Stressed NBFCs and HFCs

Published: August 9, 2020

The Finance Ministry has declared that the government has sanctioned 15 proposals worth Rs 6400 crores as part of the Special Liquidity Package, a part of the Rs 20.97 lakh crore ‘Atmanirbhar Bharat’ Package announced by the government.

What is the Scheme?

This scheme was launched on July 1 and it permits both primary and secondary market purchases of debt and seeks to address the short-term liquidity issues of non-banking financial companies and housing finance companies in the country. The scheme is of Rs 30000 crores and its main objective is to improve the liquidity condition of the NBFCs and HFCs in the country. The scheme is open for three months for making subscriptions.

Why is this scheme required?

This scheme was launched since the NBFCs and the HFCs came under stress following a series of defaults in September 2018.

Who are eligible for the scheme?

Any NBFC including the microfinance institutions registered with RBI under the RBI Act, 1934 and any HFC registered with the National Housing Bank under the NHB Act 1987 which is complying with certain specific conditions are eligible to raise funding from this facility.

How is the scheme being implemented?

The RBI is providing the funds for the scheme by subscribing to government-guaranteed special securities issued by a trust set up by SBI Capital Market Limited. The scheme is implemented by SLS Trust, the SPV set up by SBICAP. The government will provide an unconditional and irrevocable guarantee to the special securities issued by the trust. These instruments to be subscribed are going to be commercial papers and non-convertible debentures.

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