In order to tackle with the issues related to Stress found in the NBFC Sector, sooner guidelines will be issued to the Public Sector Banks, to enable them to take over the pooled assets of Non-banking Financial companies as per a report from the Government.
In this connection both the department of Economic Affairs and Financial Services are mutually in consultation to finalize the modalities, and the eligibility norms for take over.
In the recent budget, the FM has proposed that during the current financial year, PSBs would be purchasing high rated Pooled Assets of financially sound NBFCs, which amounts to Rs. 1 lakh crore. In this regard the Government will be providing one time partial Credit guarantee to PSBs for a period of six months, to cover the first loss of upto 10%.
It is also learnt that banks would be permitted to pick up primarily “AAA”rated assets where chances of delinquency is the lowest and big Public Sector Banks will be permitted to participate in this. In other words, this would facilitate the participating banks to raise the size of their balance sheet and thus contribute for better liquidity position of the NBFCs. Also it is learnt that most of the assets will be with maturity of less than three years’ period. It is further learnt that banks which are themselves in high stress, will not be participating in this process. Further,
- RBI after the budget announcement came out with a special liquidity window which could possibly release Rs. 1.3 lakh corre.
- The NBFC sector was under huge stress due to a series of default by group companies of IL&FS since September last year.
- As per guidelines, NBFCs which are engaged in public placement of debit are to maintain a DRR and more so in addition a special reserve should be maintained, as per RBI guidelines.