Wednesday, October 20, 2021
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RBI Special Liquidity Scheme for NBFCs and HFCs

Smt. Nirmala Sitharaman, Union Minister for Finance & Corporate Affairs had announced and launched a Special Liquidity Scheme of Rs. 30,000 crore on 13th March, 2020 with a view to improving the liquidity position of NBFCs as well as HFCs.

Key Highlights:

  • RBI 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 crores at any point of time.
  • Government of India will provide an unconditional and irrevocable guarantee to the special securities issued by the Trust.
  • The Scheme is being launched on July 1, 2020 through a Special Purpose Vehicle in the form of SLS Trust set up by SBI Capital Markets Limited (SBICAP).

 Who can take the benefit:

NBFC including Microfinance Institutions registered with RBI under the Reserve Bank of India Act, 1934 (excluding those registered as Core Investment Companies) any HFC registered with the National Housing Bank (NHB) under the National Housing Bank Act, 1987

 

Following Conditions required to be complied to get eligible to raise funding from the said facility:

  1. Compliance with RBI regulations on Capital adequacy
  2. Net NPA is less than 6% as on 31.03.2019
  3. Net profit in at least one of the two preceding financial years
  4. Rated as investment grade by a rating agency
  5. Is not reported under SMA-1 or SMA-2 category by any bank for their borrowing during the period one year prior to 01.08.2018

Scheme Period:

Launched on July 1, 2020 and The Scheme will remain open for 3 months for making subscriptions by the Trust.

Period of Lending

(CPs/NCDs of NBFCs/HFCs for short duration of upto 90 days) by the Trust shall be for a period of upto 90 days.

Use of the funds

  • The financing would be used by the NFBCs/HFCs only to repay existing liabilities and not to expand assets.
  • Further, those market participants who are looking to exit their standard investments with a residual maturity of 90 days may also approach the SLS Trust.

About this scheme

  • This facility is a part of the Government of India and RBI’s efforts
  • To alleviate the concerns of the market participants on the availability of funds to the sector.
  • To avail liquidity under the Scheme can apply at [email protected]
  • Details of the Scheme can be viewed on the website of SBI Capital Markets.

RBI Circular on the Special Liquidity Scheme for NBFCS/HFCs

http://pibcms.nic.in/WriteReadData/userfiles/RBI%20Circular%20on%20SLS-July%201,2020.PDF.PDF

Link of the press release:

https://www.pib.gov.in/PressReleseDetail.aspx?PRID=1635729


Disclaimer:

IN NO EVENT THE AUTHOR SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM OR ARISING OUT OF OR IN CONNECTION WITH THE USE OF THIS INFORMATION. THIS HAS BEEN SHARED FOR KNOWLEDGE PURPOSES ONLY.

CS Lalit Rajputhttp://enlightengovernance.blogspot.com/
Company Secretary having 5 years of post-qualification experience in the Compliance Management Services industry by serving Corporates including Listed Companies, Corporate Secretarial Firms, and LLP.

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