Govt to provide one-time guarantee of Rs 10,000 cr for NBFC assets, bonds

This is an extension of its budget announcement, where it had said it would compensate them to the extent of 10% of the losses banks incur on their NBFC bond portfolio

The government will provide one-time partial credit guarantee of up to Rs 10,000 crore to banks for purchase of bonds,  commercial papers and pooled assets of non-banking financial companies (NBFC) and housing finance companies (HFC), it said on Thursday.

This is an extension of the government’s budget announcement, where it had said that if public sector banks incurred losses on assets pooled from NBFCs, the government will compensate them for 10 per cent of the losses. That meant that banks could purchase up to Rs 1 trillion of assets of the NBFCs under the partial credit guarantee scheme (PCGS 1.0).

However,