The Reserve Bank of India (RBI) has given funds for special liquidity scheme by subscribing to government-guaranteed special securities distributed through a trust set up by SBI Capital Market (SBICAP). The special liquidity scheme was launched on 1st July 2020 to address financial stress arises due to COVID crisis.
SBI Capital Market has received financing proposal application of around INR 10,000 crore under special liquidity scheme worth INR 30,000 crore from troubled housing finance companies (HFCs) and non-financial companies (NBFCs). Amidst lockdown, undergoing COVID-19 crisis and extended moratorium by the central bank has deteriorated the financial health of HFCs and NBFCs.
Non-banking financial companies (NBFCs) and housing finance companies (HFCs) came under stress by a series of defaults by troubled real estate developers and high exposure to IL&FS group companies from September 2018.
To rescue stressed HFCs and NBFCs, the RBI issued circular on 1st July 2020 regarding special liquidity scheme. SBI Capital Market (SBICAP) has received about 24 financing proposal applications requesting close to INR 9,875 crore as on 7th July 2020.
Out of 24 applications processed, the first application has been approved and remaining is into consideration. The investment committee of special liquidity scheme (SLS) trust has approved investment worth INR 200 crore in commercial paper issued by the applicant.
The INR 3 lakh crore credit guarantee scheme for micro, small, & medium enterprises (MSMEs) sector has been allotted under the Atmanirbhar Bharat package to tide over economic shock received by COVID-19 pandemic.
Banks have sanctioned loans close to INR 1, 29,099 crores under the INR 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs sector. Till 9th July 2020, about INR 61,987 crore of funds have been disbursed by banks to MSMEs.
The Reserve Bank of India and SBI Capital Market are expecting speedy disbursal of credit by Investment Committee of Special Liquidity Scheme (SLS) Trust to diffuse financial hardship faced by NBFCs and HFCs. This would bring revival in borrowing to home-buyers and real estate developers to finish their stalled inventories.