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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