Clipped from: https://www.thehindubusinessline.com/
Non-banking finance companies have asked Finance Minister Nirmala Sitharaman to amend the special liquidity scheme to cover a tenure of up to three years and also cover term loans taken from banks and financial institutions.
The issues were discussed on Friday in a video conferencing meeting of the Finance Industry Development Council (FIDC) with the FM and Secretaries of Departments of Economic Affairs and Financial Services.
“The tenure of the NBFCs’ debt to be acquired by the SPV is only three months, where as NBFCs lend for an average tenure of three years. This will not result in additional cashflows to NBFCs,” said FIDC in a statement, adding that majority of small and medium NBFCs do not issue bonds and raise debt by way of term loans, which are not covered under the scheme.
While the government’s ‘AtmaNirbhar’ stimulus package announced measures that would help NBFCs tackle issues of liquidity, many of these shadow lenders have been disappointed by the final modalities of the scheme.
FIDC has requested for one-time restructuring of loan repayment terms without any additional provisioning as many NBFC borrowers would require working capital post lockdown and are facing cash flow problems.
It has also proposed that the extended partial credit guarantee scheme may cover new term loans sanctioned by banks to small- and mid-sized NBFCs (rated AA and below) up to 20 per cent of loan amount till the entire loan is repaid.