Spl liquidity scheme rolled out for NBFCs

The Reserve Bank of India (RBI) on Wednesday announced the conditions for the non-banking finan-ce companies (NBFCs) and housing finance companies (HFCs) for availing the benefit of the government’s special liquidity scheme under special purpose vehicle (SPV). As per the government’s decision, SBI Cap, a subsidiary of the State Bank of India, has set up an SPV to manage this operation.

Under the scheme, the SPV will purchase the short-term papers from eligible NBFCs/HFCs, who shall utilise the proceeds under this scheme solely for the purpose of extinguishing existing liabilities.

The instruments will be CPs and NCDs with a residual maturity of not more than three months and rated as investment grade.

The facility will not be available for any paper issued after September 30, 2020 and the SPV would cease to make fresh purchases after September 30,

2020 and would recover all dues by December

31, 2020; or as may be modified subsequently under the scheme said the central bank.

“The Government has approved a scheme to improve the liquidity position of NBFCs/ HFCs through a SPV to avoid any potential systemic risks,” RBI said.