NBFCs Avail Just A Quarter Of Funds From Special Liquidity Window

Less than a quarter of funds were disbursed to stressed non-bank lenders under the Rs 30,000-crore Special Liquidity Scheme announced by the government.

About Rs 7,227 crore has been disbursed to NBFCs from the approved applications worth Rs 11,120 crore--received from 39 proposals--of non-bank lenders by the special entity set up for the purpose, according to a statement by Ministry of Finance. The scheme kicked off from July 1, and closed on Sept. 30.

The scheme was announced as part of Aatmanirbhar Bharat package in May to provide liquidity support to NBFCs, housing and mincrofinance lenders that were finding it difficult to raise money from debt markets amid Covid-19 disruption. Under the scheme, the special purpose vehicle created by SBI Capital Markets had to buy debt--with a maturity of three months--of non-banking financial companies, housing finance companies, and microlenders from both the primary and the secondary markets.

Of the approved applications seeking Rs 11,120 crore, Rs 3,707 crore lapsed as the scheme ended on Sept. 30, the statement said.

The special liquidity window largely targeted liability side of NBFCs, and funds were made available for a tenure of three months to repay their existing borrowings, said Raman Aggarwal, a director at non-bank lender Paisalo Digital. “This led to creating another liability to repay NBFCs' current liability,” Aggarwal told BloombergQuint. On the contrary, NBFCs, especially small lenders, needed more funds for longer tenure for fresh lending.

Partial Credit Guarantee 2.0

Under the Rs 45,000-crore Partial Credit Guarantee Scheme, also announced as a part of the Aatmanirbhar Bharat package, banks have approved Rs 25,505 crore worth of purchases of NBFC bonds and commercial paper as on Sept. 25.

This scheme was also launched to provide liquidity support to non-bank, housing and microfinance lenders, with public sector banks purchasing their portfolio of bonds and commercial paper. The government will guarantee the first 20% of the loss.