Nirmala Sitharaman announces Rs 45,000 cr infusion for NBFCs - Hindustan Times
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Nirmala Sitharaman announces Rs 45,000 cr infusion for NBFCs

Hindustan Times, New Delhi | Byhindustantimes.com| Edited by: Sabir Hussain
May 13, 2020 06:36 PM IST

The scheme is designed to boost NBFCs, HFCs and MFIs with low credit ratings that require liquidity for fresh lending to MSMEs and individuals.

The government on Wednesday threw a lifeline to India’s stressed shadow banking sector with an announcement of a Rs 45,000 crore liquidity infusion through a Partial Credit Guarantee Scheme (PCGS) 2.0 for non-banking financial companies (NBFCs)

New Delhi: Union Finance Minister Nirmala Sitharaman made the announcement as part of the government’s package to boost the economy that has slowed down due to the Covid-19 pandemic.(PTI file photo)
New Delhi: Union Finance Minister Nirmala Sitharaman made the announcement as part of the government’s package to boost the economy that has slowed down due to the Covid-19 pandemic.(PTI file photo)

Union Finance Minister Nirmala Sitharaman made the announcement as part of the government’s package to boost the economy that has slowed down due to the Covid-19 pandemic.

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The scheme is designed to boost NBFCs, HFCs and MFIs with low credit ratings that require liquidity for fresh lending to MSMEs and individuals.

The existing PCGS scheme will be extended to cover borrowings such as primary issuance of bonds/CPs of such entities.

Under the scheme, the first 20% of the loss will be borne by the government which will be the guarantor.

The scheme is expected to result in a liquidity of Rs 45,000 cr.

In the last few years, NBFCs have been struggling with bad assets and corporate governance issues.

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One of the most high-profile cases was Infrastructure Leasing and Financial Services whose operations the government took over last year it defaulted payments in 2018.

The Dewan Housing Finance Limited or DHFL was another high profile company that had defaulted on interest payments last year and is now under a money laundering probe.

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