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Tuesday, September 29, 2020

Eyeing liquidity, govt extends partial credit guarantee scheme 2.0 by 3 months to Nov 19

The Finance Ministry said AA and AA- investment sub-portfolio should not exceed 50 per cent (instead of 25 per cent, or Rs 11,250 crore, mandated earlier) of the total portfolio of bonds or commercial papers (CPs) purchased by public sector banks under the scheme.

By: ENS Economic Bureau | New Delhi | August 18, 2020 3:01:07 am
Meanwhile, the RBI said on a year-on-year (Y-o-Y) basis, non-food bank credit growth at 6.7 per cent in July 2020 was the same as in June 2020 but lower than the growth of 11.4 per cent in July 2019. (File)

The government Monday extended the validity of its Rs 45,000-crore Partial Credit Guarantee Scheme 2.0 by three months to November 19 to improve liquidity for low-rated shadow lenders and enable state-run banks to raise AA and AA- investment sub-portfolio under this scheme by another Rs 11,250 crore.

The Finance Ministry said AA and AA- investment sub-portfolio should not exceed 50 per cent (instead of 25 per cent, or Rs 11,250 crore, mandated earlier) of the total portfolio of bonds or commercial papers (CPs) purchased by public sector banks under the scheme.

The PCGS 2.0 covers borrowings, such as primary issuance of bonds/commercial papers of such firms, wherein the government will bear the first 20 per cent of loss. The government has said AA-rated papers and below, including unrated papers, will be eligible for investment. The Ministry said the latest decisions were made, “keeping in view the progress under the scheme and the fact that the stipulated limit for AA/AA- rated bonds/CPs has been nearly reached while the appetite for lower rated bonds/CPs is nearing saturation considering their lower ticket size”. —FE

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