Govt launches Special Liquidity Scheme for NBFC of Rs. 30,000 crore
The Government of India has launched a Special Liquidity Scheme worth Rs. 30,000 crore for improving the liquidity position of Non-Banking Financial Company (NBFCs) and Housing Finance Company (HFCs).
- Who will manage the Scheme: The Scheme will be managed by SPV (SLS Trust). SPV (SLS Trust) has been set up by SBICAP which is a subsidiary of the State Bank of India.
- RBI will provide funds for this Scheme by subscribing to government-guaranteed special securities issued by the SLS Trust. The total amount of such securities issued outstanding shall not exceed Rs. 30,000 crores at any point of time.
The Scheme was announced by Union Minister for Finance Nirmala Sitharaman on 13th March 2020.
- Aim of the scheme: to ensure availability of fund to NBFC and HFC sector and hence improve the liquidity position of NBFCs/HFCs.
- Duration of the scheme: The Scheme will remain open for 3 months for making subscriptions by the Trust. The period of lending (CPs/NCDs of NBFCs/HFCs for short duration of upto 90 days) by the Trust shall be for a period of upto 90 days.
- Use of Fund by NBFC and HFC: NBFC and HFC cannot use this financing to expand assets. The financing would be used by the NFBCs/HFCs only to repay existing liabilities.
- Outlay of the Scheme: Rs 30,000 Crore
Eligibility criteria for NBFC and HFC:
- CRAR/CAR of NBFCs/HFCs should not be below the regulatory minimum, i.e., 15% and 12% respectively as on March 31, 2019;
- The net non-performing assets should not be more than 6% as on March 31, 2019;
- They should have made net profit in at least one of the last two preceding financial years (i.e. 2017-18 and 2018-19);