The NBFCs have also requested the government to make changes in Rs 3-lakh crore credit line for micro, small and medium enterprises (MSMEs). “Request allocation of 20% out of Rs 3 lakh crore for utilisation by NBFCs,” FIDC wrote to Sitharaman.
By Ankur Mishra
The Finance Industry Development Council (FIDC), an industry body representing non-banking financial companies (NBFCs), has written to finance minister Nirmala Sitharaman seeking changes and improvements to the schemes to make them more effective.
The representative body has sought three changes to the measures pertaining to the Rs 30,000-crore liquidity facility, partial credit guarantee scheme and guarantee on loans of Rs 3,00,000 crore to SMEs. “We request you to extend the tenure of the special liquidity scheme for NBFCs amounting to Rs 30,000 crore to three years instead of three months,” the NBFC body said in its letter. Any NBFC availing of funds under this scheme may end up in disturbing its asset/liability match, the letter further said.
The Cabinet on Wednesday approved a special liquidity scheme worth Rs 30,000 crore for NBFCs, under which the Reserve Bank of India (RBI) will indirectly purchase debt. “Three months’ borrowing does not need a government scheme, NBFCs anyway borrow money from market for such short tenures,” a head of an NBFC told FE. “We need money for longer tenure from government for any scheme to be effective,” the person added.
FIDC has also requested the government to extend the tenure of partial credit guarantee scheme (PCGS) 2.0 worth Rs 45,000 crore to three years from the current tenure of one year. The Cabinet on Wednesday approved partial credit guarantee scheme (PCGS) 2.0 to improve liquidity for low-rated shadow lenders and eased certain criteria for the pooled purchase of NBFC assets by state-run banks under the existing PCGS 1.0.
The NBFCs have also requested the government to make changes in Rs 3-lakh crore credit line for micro, small and medium enterprises (MSMEs). “Request allocation of 20% out of Rs 3 lakh crore for utilisation by NBFCs,” FIDC wrote to Sitharaman. This would ensure that the weaker profiles of MSMEs which are mainly catered by NBFCs are able to get additional funds through this initiative, FIDC further said.
FE reported earlier that NBFCs were unhappy with the secondary market participation allowed under Rs 30,000-crore special liquidity scheme. The government has allowed both primary and secondary market purchases under the scheme. NBFCs are of the view that mutual funds may benefit more from the scheme due to secondary market purchase. “We are going to write separately on allowing only primary market purchase under Rs 30,000-crore special liquidity scheme,” an FIDC official told FE.