State-run banks have allowed plans to purchase bonds and commercial papers worth Rs 14,667 crore issued by 67 non-banking finance companies (NBFCs) under the enhanced Partial Credit Guarantee Scheme (PCGS). The country’s Finance Minister Nirmala Sitharaman has given this information on Wednesday. Of this amount, Rs 6,845 crore is for bonds and CPs with ratings below AA, which will provide liquidity support to NBFCs with low ratings and bonds and commercial papers.
The Partial Credit Guarantee Scheme (PCGS) was revamped under the #AatmanirbharBharat Package to support the liability side of NBFCs by providing a 20% portfolio guarantee to Public Sector Banks for the purchase of Bonds / Commercial Papers rated AA and below issued by NBFCs.
- NSitharamanOffice (@nsitharamanoffc) July 15, 2020
The Partial Credit Guarantee Scheme was revamped under the Self-Reliant India Campaign to provide liquidity support to NBFCs. This included 20 percent portfolio guarantee for the purchase of AA and below rated bonds and commercial papers issued by NBFCs by public sector banks.
The Finance Minister has tweeted and provided sector-wise details of bonds and commercial papers issued by NBFCs permitted for purchase. Accordingly, bonds and commercial papers worth Rs 3,060 crore of 12 NBFCs in Northern region, 1,357 crore bonds and commercial papers of 3 NBFCs in Eastern and North-Eastern region, Rs 4,540 crore bonds and commercial papers of 29 NBFCs in the Western region. And in the southern region, 23 NBFCs include bonds and commercial papers worth Rs 5,710 crore. In this way, the purchase of bonds and commercial papers of 67 NBFCs worth Rs 14,667 crore has been allowed.
As of 10 July 2020, under the extended PCGS, #PSBs have approved for purchase bonds / Commercial Papers issued by 67 NBFCs amounting to Rs 14,667 crore, of which Rs 6,845 crore is for Bonds / CPs rated below AA, providing liquidity support to NBFCs with lower-rated Bonds / CPs. pic.twitter.com/cmoMZuQohM
- NSitharamanOffice (@nsitharamanoffc) July 15, 2020
The government has taken several steps in the last weeks to help the various sectors struggling with the crisis due to the fall in demand and private investment due to the COVID-19 outbreak.
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