As part of the ‘Aatmanirbhar Bharat’ package, the Finance Ministry had announced that 24 proposals of stressed NBFCs and HFCs worth Rs 8,594 crore have been sanctioned under the special liquidity scheme.
The Aatmanirbhar Bharat program which came into being on July 1, allows both primary and secondary market purchases of debt and seeks to address the short-term liquidity issues of non-banking financial companies (NBFCs) and housing finance companies (HFCs).
Sharing implementation status update of the Rs 30,000 crore Special Liquidity Scheme (SLS), Finance Minister Nirmala Sitharaman has said that 17 more applications looking for financing of up to Rs 3,684.5 crore are under process while 24 proposals with an over-all sanctioned amount of Rs 8,594 crore have been cleared as on August 21,
The amount distributed stood at Rs 3,279 crore as on 21st August.2020. There is an increase of Rs 2,195 crore in the amount sanctioned, and an increase of Rs 2,279 crore in the amount disbursed as compared to 7th August 2020.
NBFCs and HFCs came under stress following a sequence of defaults by IL&FS group firms in September 2018. NBFCs including microfinance organizations enrolled under the RBI Act, 1934 (excluding those enlisted as Core Investment Companies) and any HFC enlisted with the National Housing Bank under the National Housing Bank Act, 1987, which is fulfilling the certain specified conditions, are eligible to raise funding from this facility.
The funds for the scheme have been provided by the Reserve Bank of India by subscribing to government-guaranteed special securities offered by a trust set up by SBI Capital Markets Ltd (SBICAP). The scheme is being executed by SLS Trust, the SPV set up by SBICAP.
The special liquidity program is open for three months for making subscriptions by the Trust. Under the plan, the government will offer an unconditional and irrevocable guarantee to the special securities issued by the Trust. The instruments will include commercial papers and non-convertible debentures with a remaining maturity of not more than three months and rated as investment grade. Hence, those market participants who are awaiting to exit their standard investments with a remaining maturity of 90 days may also approach the SLS Trust.