The press information bureau in its press release dated 4th February 2020, has enumerated various steps that have been taken by the ministry o finance since 2018 to increase credit flow in the country. This was stated by Shri Anurag Singh Thakur, Union Minister of State for Finance & Corporate Affairs, in a written reply to a question in Rajya Sabha today.
The following steps have been taken to increase the credit flow:
- A special dispensation has been given for banks, whereby their incremental credit to NBFCs after 19.10.2018 could be treated as high-quality liquid assets for calculation of liquidity coverage ratio and Securitisation guidelines for NBFCs have been relaxed by lowering the minimum holding period requirements from one year to six months.
- A Partial Credit Guarantee Scheme (PCGS) has been launched for purchase of pooled assets of NBFCs.
- Single-borrower exposure limit for NBFCs (excluding gold loan companies) has been increased from 15% to 20% of tier-I capital of the bank and the minimum average maturity requirement for External Commercial Borrowings in the infrastructure space by eligible borrowers has been reduced from five years to three years.
- Bank credit to Non-Banking Financial Companies (NBFCs) other than Micro-Finance Institution NBFCs for on-lending has been made eligible for classification as priority sector up to a limit of 5% of individual bank’s total priority sector lending and up to Rs. 10 lakh per borrower for agriculture and up to Rs. 20 lakh per borrower for micro and small enterprises and for housing.
Click here to read the Notification.
