RBI announces special liquidity scheme for NBFCs and HFCs through a SPV
Mumbai/IBNS: In the bid to improve the liquidity position of the NBFCs and HFCs amid the sagging economic situation triggered by Covid-19 pandemic, the government has approved a special scheme to prevent potential systemic risk in the financial sector, the Reserve Bank said on Wednesday.
The scheme will be made available through a Special Purpose Vehicle (SPV) to:
- The Non-Banking Financial Company (NBFCs), including Microfinance Institutions that are registered with the RBI, under the Reserve Bank of India Act, 1934, excluding those registered as Core Investment Companies and the Housing Finance Companies that are registered under the National Housing Bank Act, 1987.
- The CRAR/CAR of NBFCs/HFCs should not be below 15% and 12%, respectively, the regulatory minimum, as of March 31, 2019.
- Further, their net non-performing assets (NNPA) should not be greater than 6% as on March 31, 2019.
- The companies seeking the benefits should have made profits in at least one of the last two preceding financial years--2017-18 and 2018-19.
- They should not have been reported under SMA-1 or SMA-2 category by any bank for their loans during the period of one year prior to August 01, 2018.
- The NBFCs/HFCs should be rated investment grade by a SEBI registered rating agency.
- They should have appropriate levels of collateral as required by the SPV.
A Mint report said that the SPV has been set up by SBICAP, a subsidiary of the State Bank of India, as per the government decision.