Sitharaman announces Rs 45 thousand crore liquidity infusion for NBFCs

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Finance Minister Nirmala Sitharaman came to the aid of Non-Banking Financial Companies (NBFC) as she declared liquidity infusion of Rs 45 thousand crore for them. Housing Finance Companies (HFCs) and Micro Finance Institutions (MFIs) are bound to help as well. This can be considered as Partial Credit Guarantee Scheme 2.0 (PCGS) as a PCGS is in place already.

Here are the details of new Partial Credit Guarantee Scheme (PCGS)

1. This scheme will help NBFCs,MFIs and HFCs who have low credit rating. This, in turn, will help MSMEs as more liquidity will be available to them.
2. Existing PCGS scheme will be extended to cover borrowings such as primary issuance of bonds and CPs of such entities.
3. First 20 per cent of the loss will be borne by Government of India, the guarantor.
4. AA paper and below including unrated paper will be eligible for investment.

To address difficulties faced by NBFCs, MFIs, and HFCs the government will launch another Rs 30,000 Special Liquidity Scheme

Here are the details of Special Liquidity Scheme

1. Investment will be made in primary and secondary market transactions in investment-grade debt paper of NBFCs, HFCs, MFIs 
2. The scheme will supplement RBI/Government's efforts to augment liquidity.
3. Securities will be fully guaranteed by Government of India.
4. This will provide liquidity support to NBFCs, HFCs, MFIs and mutual funds

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