Among other big bang announements, Finance Minister Nirmala Sitharaman on Wednesday announced collateral free automatic loans for businesses, including MSMEs, up to ₹3 lakh crore.
She also said ₹45,000 crore liquidity will be infused into NBFCs through partial credit guarantee scheme. FM Sitharaman announced ₹30,000 crore liquidity facility for NBFCs, housing finance companies and MFIs. Under this special liquidity scheme,
NBFCs, HFCs and MFIs with low credit rating require liquidity to do fresh lending to MSMEs and individuals and hence the liquidity infusion, she said.
Under the liquidity scheme, investments will be made in both primary and secondary market transactions in investment grade debt papers of these companies. These securities will be fully guaranteed by the government, Sitharaman said.
This liquidity scheme will be in addition to the cheap funding available under the RBI’s Targeted Lending Term Repo Operations (TLTRO 2.0).
Sitharaman also said that the government will guarantee the first 20% of loss.
Electricity distribution companies are facing serious crisis, hence emergency liquidity infusion of ₹90,000 crore in discoms, FM announced.
State-owned Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) will infuse the liquidity by raising an amount of about ₹90,000 crore from the market against the receivables of discoms. The state governments will provide a guarantee.
“We want the benefit passed to the customers…we are making it clear that these benefits should pass to the end consumers,” Sitharaman said.
This one-time time liquidity infusion will be used to pay the central public sector power generation companies, transmission companies, independent power producers and renewable energy generators.
Under the MSME measure, borrowers with up to ₹25 crore outstanding and ₹100 crore turnover would be eligible for the special collateral free loan.
The loan will have a 4 year tenor with moratorium of 12 months on principal repayment and the interest will be capped.
There will be a 100 per cent credit guarantee cover to banks and NBFCs on principal and interest. The initiative can be availed till October 31, 2020, and no guarantee fee and fresh collateral would be required.
On the back of the scheme, 45 lakh units can resume business activity and safeguard jobs.
