What was the NBFC package all about and will it help MFs?
(1) 30,000 cr will be infused. So any bank who wants to buy NBFC/HFC/MFIs debt paper from the secondary market (mainly from MFs) can buy it and the guarantee will be given by the government (1/n)
(1) 30,000 cr will be infused. So any bank who wants to buy NBFC/HFC/MFIs debt paper from the secondary market (mainly from MFs) can buy it and the guarantee will be given by the government (1/n)
so if after having bought the paper if the institution defaults, government will pay. This is only for Investment grade paper (BBB- and above). This is definitely a big plus for MF. The FT schemes that got shut have 40% exposure to the above sector. (2/n)
(2) The same 30,000 cr above can also be used to subscribe for primary (new) issues/fund raising by the financial institutions. (3/n)
(3) AA- and below rated financial institutions are finding it difficult to raise new money from the market and hence an additional 45,000 cr is allocated here. (4/n)
Banks can subscribe 2 the new bonds/CPs issued & if 4 some reason some of it defaults, first 20% will b borned by the government. My reading of the FIRST 20% is, out of 100 cr invested, upto the first 20cr default, the entire 20 cr (100%) will be paid by the government.(end)
