Finance Minister announced Rs 30,000-crore special liquidity scheme for NBFCs, MFIs
- Finance Minister Nirmala Sitharaman announced a Rs 30,000- crore special liquidity scheme for non-banking finance companies (NBFCs), housing finance companies (HFCs) and micro-finance institutions (MFIs).
- She also announced an extension of the partial credit guarantee scheme worth Rs 45,000 crore under which the first 20 percent loss in debt papers will be borne by the government.
- Government will launch a Rs.30,000 crore Special Liquidity Scheme.
- Under this scheme investment will be made in both primary and secondary market transactions in investment grade debt paper of NBFCs/HFCs/MFIs
- Will supplement RBI/Government measures to augment liquidity.
- Securities will be fully guaranteed by Government of India.
- This will provide liquidity support for NBFCs/HFCs/MFIs and Mutual Funds and create confidence in the market
Finance Minister announced Rs. 45,000 crore Partial Credit Guarantee Scheme 2.0 for NBFCs
- NBFCs, HFCs and MFIs with low credit rating require liquidity to do fresh lending to MSMEs and individuals.
- Existing PCGS scheme to be extended to cover borrowings such as primary issuance of Bonds/CPs (Liability side of balance sheets) of such entities.
- First 20% of loss will be borne by the Guarantor i.e:- Government of India.
- A4 paper and below including unrated paper eligible for investment (Esp. relevant for many MFIs)
- This scheme will result in liquidity of Rs.45,000 crores.
About NBFC-
- A Non Banking Financial Company (NBFC) is a company registered under the Companies Act, 2013 of India, engaged in the business of loans and advances, acquisition of shares, stock, bonds, hire-purchase insurance business or chit-fund business, but does not include any institution whose principal business is that of agriculture, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable property.
About MFI-
Micro finance Institutions, also known as MFIs, a microfinance institution is an organization that offers financial services to low income populations. Almost all give loans to their members, and many offer insurance, deposit and other services. A great scale of organizations are regarded as microfinance institutes. They are those that offer credits and other financial services to the representatives of poor strata of population (except for extremely poor strata).
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