Current context: The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has given its approval to the "Partial Credit Guarantee Scheme" for purchase of high-rated pooled assets from financially sound NBFCs/HFCs by PSBs.
b. Only 2
c. Both 1 and 2
d. None of the above
- Public Sector Banks (PSBs) can purchase high-rated pooled assets from financially sound Non-Banking Financial Companies (NBFCs) / Housing Finance Companies (HFCs):
- With the amount of overall guarantee being limited to first loss of up to 10 % of fair value of assets being purchased by the banks under the Scheme.
- Or Rs. 10,000 crore, whichever is lower, as agreed by Department of Economic Affairs (DEA).
- The scheme would cover NBFCs / HFCs that:
- May have slipped into SMA-0 category during the one year period prior to 1.8.2018, and
- Asset pools rated "BBB+" or higher.
- The window for one-time partial credit guarantee will remain open till 30th June, 2020 or till such date by which Rs. 1 lakh crore assets get purchased by the Banks, whichever is earlier.
- Finance Minister is given the power to extend the validity of the Scheme by up to three months taking into account its progress.
- The Guarantee support will help address NBFCs/HFCs resolve their temporary liquidity or cash flow mismatch issues, enable them to continue contributing to credit creation etc.
- The Finance Minister announced in the Budget 2019-20 that the Government will provide one time six months' partial credit guarantee to Public Sector Banks for first loss up to 10%, for purchase of high-rated pooled assets of financially sound NBFCs, amounting to a total of Rs 1 lakh crore during the current financial year.
Question:
Q.1 The "Partial Credit Guarantee Scheme" for purchase of high-rated pooled assets from financially sound NBFCs/HFCs by PSBs covers NBFCs / HFCs that have?- Slipped into SMA-0 category during the one year period prior to 1.8.2018
- Asset pools rated "BBB+" or higher
b. Only 2
c. Both 1 and 2
d. None of the above
