15 Proposals of NBFCs, Rs 6,400 crore HFCs approved under special liquidity scheme

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The Ministry of Finance on Saturday said,15 proposal worth Rs 6,399crores, of stressed NBFCs and HFCs, as part of the Rs 20.97 lakh crore package of ‘Aatmanirbhar Bharat’ has been sanctioned under special liquidity scheme. The scheme launched on July 1 makes both primary and secondary market debt purchases and aims to fix the short-term liquidity problems of Non-banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs).

“The # AatmanirbharBharat # AatmanirbharSharat Special Liquidity Scheme (SLS) for Rs 30.000 Crore was announced to strengthen NBFC’s and HFC’s liquidity role,” Finance Minister Nirmala Sitharaman tweeted. As she said on August 7, 15 proposals were cleared with a total sum of Rs .6,399 crores accepted and 37 more applications for financing for up to Rs. 11,037 crores are underway. The shared implementation status of the scheme was updated. After a range of IL&FS Group companies in September 2018 defaulted, NBFCs and HFCs suffered from stress.

The Reserve Bank of India (RBI) provided the scheme funding through the subscription of a trust created by SBI Capital Markets Ltd (SBICAP) to government-guaranteed Special Securities. Eligible to increase financing from this facility is any NBFC including micro-finance institutions registered under the RBI law of 1934 (excluding those registered as core investment companies) and any HFC registered under the National Housing Bank Act of 1987, that complies with specific conditions.

Eligibility for funding is given to all NBFCs including microfinance institutions registered with RBI in accordance with the RBI Act of 1934 and any HFCs registered with National Housing Bank in compliance with the Law of 1987 on National Housing Bank (NHBB), which comply with certain conditions.

Three months are available for special liquidity making subscriptions by the Trust. SLS Trust, the SPV developed by SBICAP, implements the scheme. The scheme will guarantee the special securities issued by the government unquestioningly and irrevocably. The assets should be commercial papers and non-convertible debentures with less than 3 months remaining maturity and rated as investment grade.   

 Those participants in the market who want to exit with 90 days of residual maturity from their normal investment can therefore also approach the SLS Trust.

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