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Aditi Sharma made post

How will the partial credit guarantee scheme benefit NBFCs like Dewan Housing or Indiabulls Housing Finance?

Answer
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Aashna Tripathi answered.
8 months ago


The partial credit guarantee scheme was announced in the Union Budget as a scheme wherein banks would lend to NBFCs in need of liquidity and the same would be partially guaranteed by the government. However, the condition is that this facility is only going to be available for NBFCs that have an issue of liquidity and not NBFCs that have an issue of solvency.

The government has already approved nearly Rs.7,000 crore worth of such partial credit guarantees for NBFCs and this will make it easier for the NBFCs to overcome their liquidity crunch as banks will be more willing to lend to them. The government plans to take this support to as high as Rs.20,000 crore in the next two months. The idea is that it would give a boost to consumption once NBFCs are able to get back to lending like they used to do previously.

Coming to your specific question, this credit guarantee will only be available for solvent NBFCs that are having liquidity issues in the market. Dewan Housing has a problem of solvency more than liquidity and hence it would not qualify for this partial credit guarantee. However, Indiabulls Housing Finance with a relatively stronger balance sheet will surely benefit from this move of the government.