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Need speedy implementation to success of stimulus package for NBFCs: Ind-Ra
May-20-2020
Few days after announcement of stimulus package, credit rating agency India Ratings and Research (Ind-Ra) in its latest report has expressed a need for speedy implementation of the recent measures announced by the government for NBFCs to provide maximum benefit to micro, small and medium enterprises (MSMEs).
 
According to the report, the Rs 30,000 crore special liquidity scheme, which is fully guaranteed by the government, can incentivise banks to take exposure in the lower rated investment grade non-banking financial companies (NBFCs). Moreover, banks would be able to have slightly better pricing on these loans, notwithstanding them being proposed to be backed by a government guarantee, on account of the lower bargaining power of the lower rated NBFCs.
 
Ind-Ra also noted that Rs 45,000 crore partial credit guarantee scheme with 20 per cent first loss protection from the government is aimed at providing some incentive to lenders. This could provide some liquidity window to small NBFCs, provided lenders have the risk appetite to fund these entities after getting 20 per cent loss cushion.
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