Under the new scheme offered by the government and the RBI, eligible non-bank lenders will be provided short-term liquidity through an SPV. Under this scheme, the SPV will buy short-term papers from eligible NBFCs or HFCs and the proceeds will be used solely for the purpose of extinguishing liabilities. This will avoid systemic risks to the financial sector.

Such investments will be made in CPs and NCDs with residual maturity of up to 3 months and rated investment grade. This scheme can be utilized by NBFCs, MFIs as well as HFCs and other core investment companies. The only condition is that the net NPAs should be less than 6% for such financial entities to qualify for this facility offered by the government. Such entities must also be rated investment as investment grade.