[ad_1]
Finance Minister Nirmala Sitharaman announced measures worth Rs 75 billion for non-bank, mortgage lenders and microfinance financed by the lack of liquidity as part of the government’s economic rescue package.
The government has allocated Rs 30 billion to buy investment grade debt from non-bank financial companies (NBFC), home finance companies (HFC) and microfinance institutions. The second measure is a Rs 45 billion partial guarantee scheme on primary market paper sold by NBFC.
Of the two measures, the first affects debt funds the most because it allows purchases in the primary and secondary markets. This will be done by banks with a government credit guarantee on such papers, said a debt fund manager on condition of anonymity.
“The Rs 30 billion liquidity facility is likely to support MFIs, HFCs and NBFCs in that order. I don’t think big NBFCs can benefit greatly. However, it will help them and the NBFC paper debt funds on the margins, ”said Akhil Mittal, senior fund manager, fixed income, Tata Asset Management Ltd.
Recent downgrades on certain NBFCs have added pressure on mutual fund portfolios. The finance minister also announced a partial guarantee scheme for NBFC loans in the primary market, including commercial paper and bonds. In this provision, the government would bear the first loss of up to 20% on such paper. This second facility is worth Rs 45 billion and covers debt below the AA rating. However, it only applies to primary loans and can only indirectly help mutual funds by propping up NBFC balance sheets. Mittal reiterated that even this package will primarily target and target small NBFCs.
.
[ad_2]
