NEW DELHI: The government will soon issue norms for the one-time partial credit guarantee scheme for Public Sector Banks (PSBs) to purchase pooled assets of Non-Banking Finance Companies (NBFCs).
“The guidelines are ready, we will issue them in 1-2 days,” finance and banking secretary Rajeev Kumar said during a review meeting on the performance of state-run banks.
Last week, the finance ministry had said it would put in place an oversight mechanism for the one-time partial credit guarantee scheme for PSBs to purchase high-rated pooled assets of financially sound NBFCs, as announced in the Budget 2019-20.
Sources said the state-run banks would be allowed to pick up primarily AAA-rated assets of NBFCs that have not defaulted, while only public sector banks outside the RBI’s Prompt Corrective Action (PCA) framework for resolving bad loans and those with strong balance sheets such as State Bank of India, Canara Bank and Bank of Baroda would be allowed to participate in the scheme.
Presenting her maiden Budget in July, Union Finance Minister Nirmala Sitharaman had announced that the government would provide a one-time partial credit guarantee of six months to PSBs for the first loss of up to 10 per cent to enable them to purchase pooled assets of financially sound NBFCs amounting to Rs 1 lakh crore. The finance minister has announced a series of measures to ease out the liquidity situation for NBFCs.