Left Menu
Development News Edition

Guidelines for PSU banks to pick pooled assets of NBFCs likely this week

PTI | New Delhi | Updated: 14-07-2019 13:28 IST | Created: 14-07-2019 13:25 IST
Guidelines for PSU banks to pick pooled assets of NBFCs likely this week
Image Credit: Pixabay

In a bid to deal with stress in the NBFC sector, guidelines will be issued soon for state-owned banks to take over pooled assets of non-banking financial companies, a finance ministry official said. "Both the Department of Economic Affairs, and Financial Services are in consultation. The eligibility norms for takeover should be out this week or latest by next week," the official said.

To address the stress in the sector, Finance minister Nirmala Sitharaman in the Budget proposed that public sector banks would purchase high-rated pooled assets of financially sound NBFCs, amounting to a total of Rs 1 lakh crore during the current financial year. For this, the government will provide one time six months' partial credit guarantee to PSBs for first loss of up to 10 percent.

The official further said the banks would be allowed to pick up primarily 'AAA' rated assets where chances of delinquency is the lowest and big state-owned banks will be allowed to participate in this. It will help raise the balance sheet size of the participating banks and provide better-run NBFCs access to liquidity, the official said, adding most of the assets will be not of maturity over 3 years.

Banks, which themselves are in stress, will be kept out of this, the official said. Soon after the Budget, the RBI too announced a special liquidity window which could potentially release Rs 1.3 lakh crore.

The NBFC sector came under stress following a series of default by group companies of IL&FS since September last year. Among others, Sitharaman had said the government will allow NBFCs to raise funds in public issues, and the requirement of creating a debenture redemption reserve (DRR), which is currently applicable for only public issues as private placements are exempt, will be done away with.

As of now, the NBFCs that do the public placement of debt have to maintain a DRR and in addition, a special reserve as required by the RBI has also to be maintained. In a bid to improve regulatory oversight, the government also proposed to bring housing finance companies under the RBI from the fold of National Housing Bank. Sitharaman further said that these steps are aimed at improving the condition of the NBFC sector as a whole.



Pandemic must be impetus, not obstacle, for clean water access

To make matters worse, there are suspicions that the inadequacy of wastewater treatment methods in California, the rest of the USA, and indeed around the world may help to propagate the disease even more widely. ...

3D printing and the future of manufacturing post COVID-19

The on-demand, customizable, and localized manufacturing of product components facilitated by 3D printing has the potential to redefine manufacturing but there are certain technical, mechanical, and legal limitations that, unless ...

How UK’s 'best prepared' healthcare system failed to gauge COVID-19

The UK is proud of their public health system and its unlike any other country as around 90 percent of British public supports the founding principles of National Health Service. But without accurate data being available to stakeholders in ...

Poor on IHR capacity progress in 2019, WHO says Cambodia tops COVID-19 response

Despite being in proximity to Hubei, the original epicenter of COVID-19 pandemic, Cambodia has reported just 226 confirmed cases and zero deaths. After seeing the data, WHO appreciated Cambodias healthcare information system but experts dou...


Latest News

Govt releasing $214 million from COVID-19 fund to help schools

The Government is releasing 214 million from the COVID-19 response and recovery fund to help schools and support construction firms facing additional costs due to the pandemic.COVID has undoubtedly put additional financial pressure on schoo...

FACTBOX-What people are saying about the arrest of Hong Kong's Jimmy Lai

Hong Kong media tycoon Jimmy Lai was arrested on Monday under Beijings new national security law for the city, sending a chill across the global financial hub. Lais arrest, for suspected collusion with foreign forces, is the most high profi...

Melbourne deaths rise at aged-care facilities

Australia has reported fewer new daily cases from its virus hotspot in the city of Melbourne than on any single day since last month. But it has also reported the nations highest daily death total since the virus outbreak began. The state o...

Muraleedharan raises concerns over lack of power supply in landslide-hit Idukki

Minister of State MoS for External Affairs V Muraleedharan on Monday raised concerns over inadequate healthcare facilities, road infrastructure in Kerala and claimed that people werent receiving power supply amid landslide in Idukki. Murale...

Give Feedback