Credit guarantee scheme for NBFC papers extended by three months

Greater flexibility now given for purchasing AA and below-rated papers

The government has extended the partial credit guarantee scheme (PCGS) 2.0 for three months till November 19, and offered greater flexibility under the plan. 

As part of Aatmanirbhar Bharat Abhiyan, the scheme was launched to provide portfolio guarantee for purchase of bonds or commercial papers (CPs) with a rating of AA and below issued by non-banking finance companies, housing finance companies and microfinance institutions by public sector banks (PSBs). 

It was envisaged to purchase these papers of Rs 45,000 crore under PCGS 2.0, of which the maximum headroom permissible was 25 per cent of the total portfolio--Rs 11,250 crore. 

This has been raised to 50 per cent of the total portfolio now.

This is expected to provide greater flexibility to PSBs in purchasing the papers. 

Under PCGS 2.0, PSBs have approved purchase of papers rated AA and AA- issued by 28 entities and papers rated below that issued by 62 entities amounting to Rs 21,262 crore overall. 

The average ticket size of papers rated below AA- is significantly lower than the average ticket size of above rated papers.