What changed
RBI announced a liquidity support framework for NBFCs-ND-SI facing temporary mismatches. Eligible NBFCs can sell investment-grade CPs or NCDs (residual maturity ≤ 3 months) to the SPV. The facility is only for papers issued on or before March 31, 2009, with fresh purchases ending June 30, 2009, and full recovery by September 30, 2009.
What it means for you
This provides a short-term safety valve for large NBFCs to manage liquidity crunches without resorting to distress sales. Banks and lenders should note that this is a time-bound, crisis-era measure, not a permanent window. The strict eligibility criteria (CRAR compliance, two years of net profit, net NPAs ≤ 5%) ensure only financially sound NBFCs benefit.
What you must do
- Verify if your NBFC meets the eligibility criteria: CRAR compliance, net profit in last two years, and net NPAs ≤ 5% as of last balance sheet.
- Prepare short-term CPs or NCDs with residual maturity ≤ 3 months and investment-grade rating for potential sale to the SPV.
- Contact IDBI SASF Trust at the provided address if you need to avail this facility before the June 30, 2009 deadline.
- Ensure any paper issued after March 31, 2009 is not included in this scheme.
Who it affects
Non-deposit taking systemically important NBFCs with assets ≥ Rs 100 crore, IDBI SASF Trust (SPV), Banks and financial institutions dealing with NBFC liquidity
What instruments can be sold to the SPV and for how long?
Eligible NBFCs can sell commercial papers (CPs) and non-convertible debentures (NCDs) with residual maturity of up to three months and investment-grade rating. The facility is only for papers issued on or before March 31, 2009, and the SPV will stop fresh purchases after June 30, 2009.