NBFCs, HFCs with more than 6pc net NPAs won’t be eligible for special liquidity scheme: RBI

Kolkata: The Reserve Bank of India said no non-banking finance company (NBFC) and housing finance company (HFC) with more than 6 per cent net non-performing assets will be eligible to receive support from the Rs 30,000 crore special liquidity scheme.

The NBFC will also need to have capital adequacy above 15 per cent to become eligible while for HFCs it needs to be over 12 per cent as on March 31, 2019.

The net NPA should not be more than 6 percent as on March 31, 2019. They should have made net profit in at least one of the last two preceding financial years (i.e. FY2017-18 and FY2018-19).

The Union Cabinet had in May approved the special liquidity scheme for stressed NBFC and HFCs to be channeled through a special purpose vehicle (SPV).

SBI Capital Markets, a subsidiary of the State Bank of India, has set up the SPV to manage the special liquidity window. The SPV will purchase the short-term commercial papers and bonds from eligible NBFCs and HFCs to infuse liquidity in them so that they can service their debts.

The NBFCs and HFCs can issue CPs and bonds with a residual maturity of not more than three months and should have “investment grade” credit rating. They must also have a lean repayment record in relation to their borrowings from banks to access the liquidity support, RBI said.