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Debt and Credit Guarantee Programme introduced by NABARD

Published on August 26, 2020
Current Context: The National Bank for Agriculture and Rural Development (NABARD) has launched the Debt and Credit guarantee programme for NBFC (Non-Banking Finance Companies) and MFIs (Micro Finance Institutions).
Debt and Credit Guarantee Programme introduced by NABARD

  • The name of the programme or the product is ‘Structured Finance and Partial Guarantee Program’.
  • The ‘Structured Finance and Partial Guarantee Program’ will help to ensure the flow of credit without any interruptions to the destination in rural areas which are affected due to COVID-19.
  • The ‘Structured Finance and Partial Guarantee Program’ will provide partial guarantee on pooled loans offered to NBFCs and MFIs.
  • Earlier, to launch this programme, NABARD has signed an agreement with Vivriti Capital and Ujjivan Small Finance Bank so that they will offer sustainable finance access to NBFCs and MFIs. Vivriti Capital is a technology-based credit platform which will help to build this programme. The financial transactions will be supported by Ujjivan Small Finance Bank. 
  • This programme will help in providing finance to those households, agriculture and business firms who are affected economically due to COVID-19. 
  • During the initial phase of this programme, Rs 2,500 crore are sanctioned and is expected to increase in upcoming days.
  • The programme is based on pooled loan issuance (PLI) which offers the lending bank adequate amount of comfort via credit protection and support from NABARD, in order to reduce the cost of capital as the loan ratings are notched up and thus help the lenders to meet their priority based goals. 
  • Static Part: 
    • HQ of NABARD: Mumbai
    • Chairman of NABARD: G R Chintala
    • HQ of Ujjivan Small Finance Bank: Bengaluru
    • Tagline of Ujjivan Small Finance Bank: We believe in your belief

Question: 

Q.1 Who among the following has launched ‘Structured Finance and Partial Guarantee Program’ for NBFC and MFIs?
a. RBI
b. NABARD
c. SIDBI
d. Exim Bank
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