Business Today

NBFCs Get A Lifeline

NBFCs Get A Lifeline
twitter-logo Anand Adhikari   New Delhi     Print Edition: August 11, 2019
NBFCs Get A Lifeline

The Rs 29 lakh crore troubled NBFC sector has got a lifeline from the government by way of generating Rs 1 lakh crore of liquidity through sale of pooled assets to state-owned banks. The guarantee cover of first loss up to 10 per cent would encourage banks to buy the assets and the RBI is working on a framework or a set of conditions for this. Clearly, there is a need for due diligence of the pooled assets and also the NBFCs. The financially sound NBFCs - track record of profitability, low level of NPAs and leverage, etc - would be able to participate. But there is the risk of the asset quality risk getting transferred to banks.

Banks would also have to devise their buying strategy based on the kind of assets they should be buying as government guarantee comes only for the first six months. The big question is whether the Rs 1 lakh crore in liquidity achieved through sale of pooled assets will be enough for the battered sector. Moreover, troubled NBFCs or the ones that need money desperately have been kept out because of financially sound criterion.

Youtube
  • Print

  • COMMENT
BT-Story-Page-B.gif
A    A   A
close