Any NBFC including Microfinance Institutions registered with RBI under the Reserve Bank of India Act, 1934 (excluding those registered as Core Investment Companies) and any HFC registered with the National Housing Bank (NHB) under the National Housing Bank Act, 1987which is complying with the following broad conditions will be eligible to raise funding from the said facility:

a. Compliance with RBI regulations on Capital adequacy
b. Net NPA is less than 6% as on 31.03.2019
c. Net profit in at least one of the two preceding financial years
d. Rated as investment grade by a rating agency
e. Is not reported under SMA-1 or SMA-2 category by any bank for their borrowing during the period one year prior to 01.08.2018

The Scheme will remain open for 3 months for making subscriptions by the Trust.The period of lending (CPs/NCDs of NBFCs/HFCs for short duration of upto 90 days) by the Trust shall be for a period of upto 90 days. The financing would be used by the NFBCs/HFCs only to repay existing liabilities and not to expand assets. Further, those market participants who are looking to exit their standard investments with a residual maturity of 90 days may also approach the SLS Trust.

This facility is a part of the Government of India and RBI’s efforts to alleviate the concerns of the market participants on the availability of fundsto the sector. Those wishing to avail liquidity under the Scheme can apply at info@slstrust.in. Details of the Scheme can be viewed on the website of SBI Capital Markets.

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The Minister of State stated that, including, inter-alia, the following steps, inter alia, have been taken:

1. Overall positive liquidity in the system has been ensured since June 2019 through open market operations conducted in addition to regular Liquidity Adjustment Facility auctions.

2. For liquidity support to NBFCs,—
i. A special dispensation has been given for banks, whereby their incremental credit to NBFCs after 19.10.2018 could be treated as high-quality liquid assets for calculation of liquidity coverage ratio;
ii. Securitisation guidelines for NBFCs have been relaxed by lowering the minimum holding period requirements from one year to six months for eligible loan assets till 30.6.2020; and
iii. A Partial Credit Guarantee Scheme (PCGS) has been launched for purchase of pooled assets of NBFCs.

3. For enabling NBFCs to borrow and raise funds,—
i. Banks have been permitted to provide partial credit enhancement to bonds issued by Non-Deposit-taking Systemically Important (NDSI) NBFCs registered with Reserve Bank of India (RBI) and Housing Finance Companies (HFCs) registered with National Housing Bank (NHB);
ii. The minimum average maturity requirement for External Commercial Borrowings in the infrastructure space by eligible borrowers has been reduced from five years to three years;
iii. Risk weights as per credit agency assigned ratings have been made applicable to bank exposures to NBFCs other than Core Investment Companies;
iv. Single-borrower exposure limit for NBFCs (excluding gold loan companies) has been increased from 15% to 20% of tier-I capital of the bank.

4. For increasing credit through NBFCs,—
i. Bank credit to NBFCs other than Micro-Finance Institution NBFCs for on-lending has been made eligible for classification as priority sector up to a limit of five percent of individual bank’s total priority sector lending and up to Rs. 10 lakh per borrower for agriculture and up to Rs. 20 lakh per borrower for micro and small enterprises and for housing.

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