Sage-Tips

What is special liquidity scheme for NBFC?

The Scheme permits both primary and secondary market purchases of debt and seeks to address the short-term liquidity issues of NBFCs/HFCs. Therefore, those market participants who are looking to exit their standard investments with a residual maturity of 90 days may also approach the SLS Trust.

What is special liquidity scheme?

Special liquidity scheme for NBFCs/HFCs. The Government of India has approved a scheme to improve the liquidity position of NBFCs/HFCs through a Special Purpose Vehicle (SPV) to avoid any potential systemic risks to the financial sector.

How much special liquidity scheme is announced by the government for NBFC HFC?

With a view to improving the liquidity position of NBFCs as well as HFCs, the Union Minister for Finance & Corporate Affairs Smt Nirmala Sitharamanhad announced on 13th March 2020, launch of a Special Liquidity Scheme of Rs. 30,000 crore.

Which scheme is used to regulate liquidity in the market?

A liquidity adjustment facility (LAF) is a monetary policy tool used in India by the Reserve Bank of India or RBI. The RBI introduced the LAF as part of the outcome of the Narasimham Committee on Banking Sector Reforms of 1998.

What is special liquidity scheme Upsc?

Under the scheme a Special Purpose Vehicle (SPV) would be set up to manage a Stressed Asset Fund (SAF) of the NBFCs/ HFCs. The SPV will issue securities, which would be guaranteed by the Government of India and purchased by the Reserve Bank of India (RBI) only.

What is SLS trust?

SLS Trust has been formed to provide liquidity by purchasing short term debt papers of eligible NBFCs/HFCs. RBI would provide liquidity to the Trust depending on the actual purchases by the Trust. The total exposure of the Trust will not exceed Rs. 30,000 crores.

How is repos useful in maintaining liquidity in the money market?

The resilience of the repo market helps to mitigate systemic risk. Repo also mitigates systemic risk by allowing traders and investors who need liquidity in a stressed market to convert assets temporarily into cash in a way that is less disruptive than outright sales.

Why is LCR important?

The objective of the LCR is to promote the short-term resilience of the liquidity risk profile of banks. The crisis drove home the importance of liquidity to the proper functioning of financial markets and the banking sector. Prior to the crisis, asset markets were buoyant and funding was readily available at low cost.

What is systemic liquidity?

The general concept of systemic liquidity. The IMF (2011) defines systemic liquidity risk as the “risk of simultaneous. liquidity difficulties at multiple financial institutions”.

What is structural liquidity statement?

The Statement of Structural Liquidity (Annex I) may be prepared by placing all cash inflows and outflows in the maturity ladder according to the expected timing of cash flows. A maturing liability will be a cash outflow while a maturing asset will be a cash inflow.

How is NBFC asset size calculated?

When a company’s financial assets constitute more than 50 per cent of the total assets and income from financial assets constitute more than 50 percent of the gross income. A company which fulfils both these criteria will be registered as NBFC by RBI.

What is Special Liquidity Scheme launched by RBI?

Government will launch Rs 30,000 crore Special Liquidity Scheme, liquidity being provided by RBI. Investment will be made in primary and secondary market transactions in investment grade debt paper of NBFCs, HFCs and MFIs. This will be 100 percent guaranteed by the Government of India.

What is partial credit guarantee scheme for NBFCs?

Existing Partial Credit Guarantee scheme is being revamped and now will be extended to cover the borrowings of lower rated NBFCs, HFCs and other Micro Finance Institutions (MFIs). Government of India will provide 20 percent first loss sovereign guarantee to Public Sector Banks.

How much will the MSME Loan Scheme provide to 45 lakhs?

The amount will be 100\% guaranteed by the Government of India providing a total liquidity of Rs. 3.0 lakh crores to more than 45 lakh MSMEs. Provision made for Rs. 20,000 cr subordinate debt for two lakh MSMEs which are NPA or are stressed.

What is PM Modi’s special economic package of Rs 20 lakhs?

Hon’ble Prime Minister Shri Narendra Modi yesterday announced a Special economic and comprehensive package of Rs 20 lakh crores – equivalent to 10\% of India’s GDP. He gave a clarion call for आत्मनिर्भर भारत अभियान or Self-Reliant India Movement.

https://www.youtube.com/watch?v=xZVUYtMMNNQ