Sunday, November 4, 2018

Liquidity crisis : RBI opens one more window for NBFCs

Image result for nbfcs

RBI has opened one more window for NBFCs to ease liquidity crisis faced by them. Reserve Bank of India has allowed banks to offer partial credit enhancement to bonds issued by some of these firms.

Credit enhancement is a facility through which a company improves its creditworthiness by securing a backing from a higher-rated entities. The decision to allow banks to offer partial credit enhancement to some non-bank financial companies is intended to help these firms refinance their borrowings and tide over a period of tight liquidity and risk aversion.

Banks can provide partial credit enhancement to bonds issued by systemically important non-deposit taking NBFCs and HFCs.

Tenor of bonds eligible for partial credit enhancement shall not be less than 3 years.

No comments:

Post a Comment