Special Liquidity Scheme Worth Rs. 75000 Crores To Boost NBFCs: Nirmala Sitharaman

Mumbai: Finance Minister Nirmala Sitharaman announced a total liquidity scheme worth Rs.75000 crores for Non-Banking Financial Companies, Microfinance companies, and  Housing finance companies.

The companies which are not highly rated and are not able to raise money in the debt market will be supplemented with Rs. 30000 crores in the liquidity scheme.

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Investments under this scheme will be made both primary and secondary market transactions in investment-grade debt papers of NBFCs/HFCs/MFIs. Relevant for any MFIs, AA grade paper, and below including unrated paper are eligible for investment.

This will supplement the measures taken by RBI and Government to augment liquidity. 

Further FM added, “Securities will be fully guaranteed by the GoI and this will provide liquidity support for the NBFCs/HFC/MFIs and mutual funds and create confidence in the market.”

Additionally, FM introduced a Partial Credit Guarantee Scheme 2.0 worth Rs. 45000 for the NBFCs for fresh lending.

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NBFCs, HFCs, and MFIs with low credit ratings require liquidity to do fresh lending to MSMEs and individuals under the PCGS.

Existing PCGS scheme to be extended to cover borrowings such as primary issuance of Bonds/ CPs (liability side of balance sheets) of such entities, said Sitharaman.

The first 20% of loss will be borne by the guarantor i.e. the GoI and this scheme will result in the liquidity of Rs. 45000 crores.

Prime Minister Narendra Modi had declared a special economic package of Rs.20 lakh crore, from which a total of Rs. 75000 crores will be spent for the support of NBFCs.

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