SLS Trust formed to support NBFCs-HFCs

The SBI Capital Markets Limited (SBICAP) has set up a Special Purpose Vehicle in the form of SLS Trust on 1 July 2020 to handle Rs.30,000 crore Special Liquidity Scheme to improve the liquidity position of NBFCs and HFCs.

The Government will provide an unconditional and irrevocable guarantee to the special securities issued by the Trust.

This follows the Finance Minister Nirmala Sitharaman announcement on 13 March 2020 for the launch of a Special Liquidity Scheme of Rs.30,000 crore.

RBI will provide funds for the Scheme by subscribing to government-guaranteed special securities issued by the Trust.

The total amount of such securities issued outstanding shall not exceed Rs.30,000 crores at any point of time, said the Finance Ministry on 1 July 2020.

Any NBFC including Microfinance Institutions registered with RBI under the Reserve Bank of India Act, 1934 (excluding those registered as Core Investment Companies) and any HFC registered with the National Housing Bank (NHB) under the National Housing Bank Act, 1987 which is complying with the following broad conditions will be eligible to raise funding from the said facility.

These are:

Compliance with RBI regulations on Capital adequacy

Net NPA is less than 6% as on 31.03.2019

Net profit in at least one of the two preceding financial years

Rated as investment grade by a rating agency

Is not reported under SMA-1 or SMA-2 category by any bank for their borrowing during the period one year prior to 01.08.2018

The Scheme will remain open for 3 months for making subscriptions by the Trust. The period of lending (CPs and NCDs of NBFCs and HFCs for a short duration of up to 90 days) by the Trust shall be for a period of up to 90 days.

The financing would be used by the NFBCs and HFCs only to repay existing liabilities and not to expand assets. Further, those market participants who are looking to exit their standard investments with a residual maturity of 90 days may also approach the SLS Trust.

This facility is a part of the Government and RBI’s efforts to alleviate the concerns of the market participants on the availability of funds to the sector.

Those wishing to avail liquidity under the Scheme can apply at Details of the Scheme can be viewed on the website of SBI Capital Markets. #nbfc #worldbank #finance #loans #debts #funds /


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