Focus: GS-III Indian Economy
Why in news?
The Union Minister for Finance & Corporate Affairs announced the launch of a Special Liquidity Scheme of Rs. 30,000 crores, to improve the liquidity position of NBFCs as well as HFCs.
- RBI will provide funds for the Scheme by subscribing to government guaranteed special securities issued by the Trust.
- Government of India will provide an unconditional and irrevocable guarantee to the special securities issued by the Trust.
- The Scheme is being launched through a Special Purpose Vehicle (SPV) in the form of SLS Trust set up by SBI Capital Markets Limited (SBICAP).
Under certain conditions like: Compliance with RBI regulations on Capital adequacy, Rated as investment grade by a rating agency, Net profit in at least one of the two preceding financial years etc., –
- Any NBFC including Microfinance Institutions registered with RBI under the Reserve Bank of India Act, 1934
- Any HFC registered with the National Housing Bank (NHB) under the National Housing Bank Act, 1987
Will be eligible to raise funding from the new liquidity scheme facility.
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 NBFCs and HFCs.