Special Liquidity Scheme for NBFCs and HFCs

With a view to improving the liquidity position of NBFCs as well as HFCs, the Union Minister for Finance & Corporate Affairs Smt Nirmala Sitharamanhad announced on 13th March 2020, launch of a Special Liquidity Scheme of Rs. 30,000 crore. RBI will provide funds for the Scheme by subscribing to government guaranteed special securities issued by the Trust.

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The Scheme will remain open for 3 months for making subscriptions by the Trust.

The period of lending by the Trust shall be for a period of upto 90 days.

The financing would be used by the NFBCs/HFCs only to repay existing liabilities and not to expand assets.

This facility is a part of the Government of India and RBI’s efforts to alleviate the concerns of the market participants on the availability of funds to the sector.

Any NBFC including Microfinance Institutions registered with RBI under the Reserve Bank of India Act, 1934 and any HFC registered with the National Housing Bank (NHB) under the National Housing Bank Act, 1987which is complying with the following broad conditions will be eligible to raise funding from the said facility:

  • Compliance with RBI regulations on Capital adequacy
  • Net NPA is less than 6% as on 31.03.2019
  • Net profit in at least one of the two preceding financial years
  • Rated as investment grade by a rating agency
  • Is not reported under SMA-1 or SMA-2 category by any bank for their borrowing during the period one year prior to 01.08.2018

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