NBFCs Cry Foul Over Insufficient Govt Support
The government will use Reserve Bank of India (RBI) money to support struggling non-banking financial companies (NBFC), but only for three months against the industry expectation of longer-term support — NBFCs were expecting two-three years — the government will buy bonds maturing in three months. A
Published -
May 22, 2020 6:01 AM
The government will use Reserve Bank of India (RBI) money to support struggling non-banking financial companies (NBFC), but only for three months against the industry expectation of longer-term support — NBFCs were expecting two-three years — the government will buy bonds maturing in three months. Also, the government’s partial credit guarantee scheme will be for commercial paper (CP) that matures within a year. The Cabinet also modified its previous schemes on partial credit guarantee on the first 20 per cent of losses for commercial papers (that mature within a year) issued by NBFCs rated AA and below, or even unrated NBFCs. Among other modifications, it allowed stressed-category NBFCs to avail of the benefit, as well as relaxed norms to let an NBFC to tap the facility if it has been profitable even once in the last three financial years. Earlier, this facility was available for NBFCs that were profitable at least once in the last two years. Raman Aggarwal, co-chairman of the Finance Industry Development Council (FIDC), an NBFC lobby group, termed the scheme a “non-starter”. “The special liquidity scheme is a disappointment. The funds will be made available for a tenor of up to three months. Most of the lending done is for a tenure of two-three years and so in order to prevent any asset-liability mismatch the expectation was for a tenure of three years,” Aggarwal said.
Tags : News/Views Latest News Reserve Bank of India NBFCs Special Liquidity Scheme Insufficient Govt Support Finance Industry Development Council Raman Aggarwal asset-liability