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Government launches Special Liquidity Scheme of Rs 30,000 crore rupees to improve liquidity for NBFCs and HFCs
The Union Government has launched the Special Liquidity Scheme of Rs 30,000 crore to improve the liquidity position for Non-Banking Finance Companies (NBFCs) and Housing Finance Companies (HFCs).
The Union Government has launched the Special Liquidity Scheme of Rs 30,000 crore to improve the liquidity position for Non-Banking Finance Companies (NBFCs) and Housing Finance Companies (HFCs). The scheme was launched yesterday through a Special Purpose Vehicle in the form of SLS Trust set up by SBI Capital Markets Limited (SBICAP).
The scheme was earlier announced by the Finance Minister Nirmala Sitharaman on March 13, 2020. Ministry of Finance in a statement said Reserve Bank of India will provide funds for the Scheme by subscribing to government-guaranteed special securities issued by the Trust. The total amount of such securities issued outstanding shall not exceed Rs 30,000 crore at any point in time. The Central Government will provide an unconditional and irrevocable guarantee to the special securities issued by the Trust.
The @RBI has released details regarding the eligibility conditions and other aspects of the special liquidity scheme for NBFCs/HFCs, which was announced as part of the #AatmaNirbharBharat Package. pic.twitter.com/bYeRosJrfb
— NSitharamanOffice (@nsitharamanoffc) July 1, 2020
The Scheme will remain open for three months for making subions by the Trust. The period of lending by the Trust will be for a period of up to 90 days. The financing would be used by the NFBCs and HFCs only to repay existing liabilities and not to expand assets.
This facility is a part of the Central Government and RBI's efforts to alleviate the concerns of the market participants on the availability of funds to the sector.
Any NBFC including Micro-finance Institutions registered with RBI and any HFC registered with the National Housing Bank complying with the given conditions will be eligible to raise funding from the said facility.
