PIB releases information stating the various steps taken by the Government to enhance credit flow for NBFCs

In a press release dated 4th February, 2020 the Union Minister of State for Finance & Corporate Affairs has enumerated the following steps that have been taken to increase credit flow in the country:

  1. Bank credit to Non-Banking Financial Companies (NBFCs) other than Micro-Finance Institution NBFCs for on-lending has been made eligible for classification as priority sector up to a limit of 5% 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.

  1. Partial Credit Guarantee Scheme has been launched for providing guarantee to Public Sector Banks (PSBs) for purchasing pooled assets rated BBB+ or higher from financially sound NBFCs/HFCs.

iii. Single-borrower exposure limit for NBFCs (excluding gold loan companies) has been increased from 15% to 20% of tier-I capital of the bank.

  1. Risk weights as per credit agency assigned ratings have been made applicable to bank exposures to NBFCs other than Core Investment Companies.

The Press Release also mentions several other steps that  have been taken and have been helpful for banks.

Source : Press Information Bureau

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