Government Eases Credit Norms for Stressed HFCs
With a view to provide additional liquidity to crisis-ridden NBFCs and housing finance companies (HFCs), the government relaxed norms for Partial Credit Guarantee Scheme (PCGS) for purchase of bonds and commercial papers by public sector banks and extended its period by three months. Keeping in view the progress under the Scheme and the fact that the stipulated limit for AA/AA- rated bonds/CPs (commercial papers) has been nearly reached, while the appetite for lower rated papers is nearing saturation considering their lower ticket size, the government has now decided to modify PCGS 2.0. Additional 3 months have been granted to build up the portfolio. At the end of six months, i.e. by November 19, 2020, the portfolio shall be crystallised based on actual amount disbursed, for the Guarantee to come into effect. It is expected that the above modification will provide greater flexibility to PSBs in purchasing bonds/CPs under PCGS 2.0. . As part of Rs 20.97 lakh crore ; Aatmanirbhar Bharat Abhiyan, PCGS 2.0 was launched to provide portfolio guarantee for purchase of papers with a rating of AA and below, issued by BFCs/HFCs/micro finance institutions (MFIs), by PSBs.
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