Coronavirus crisis: SBI may offer loans of up to Rs 200 crore to weak NBFCs
The country’s largest lender may come to the rescue of the weaker NBFCs by offering loans of up to Rs 200 crore per company.
The country’s largest lender may come to the rescue of the weaker non-banking finance companies (NBFCs), which have been struggling with liquidity issues, two people familiar with the talks told CNBC-TV18.
State Bank of India has decided to support lower-rated NBFCs with new loans of up to Rs 200 crore per company, to help them tide over any liquidity mismatch due to the COVID-19 pandemic, senior banking executives told CNBC-TV18 on the condition of anonymity as the decision has not been made public yet.
As per these executives, SBI has agreed to provide loans ranging between Rs 50 -200 crore each to NBFCs rated below AA, depending on their assets under management size, and requirement.
The new loans will be extended for such NBFCs with ratings of up to BBB, and not below that level, with a loan tenor of anywhere between three to five years, added one of the people quoted above.
While the better-rated NBFCs are in a position to raise funds via markets, this support is crucial for the many smaller NBFCs that have been unable to tap money from the markets. The larger players are sucking up liquidity from the Targeted Long Term Repo Operations (TLTRO) window, which was announced by the RBI.
What's worse, the RBI's moratorium decision mandates NBFCs to give the benefit of the three-month relief to their borrowers but NBFCs themselves cannot avail of the same moratorium relief from their lender-banks.
"Given the challenges in access to fresh funding, and presuming nil collections, a number of NBFCs will face liquidity challenges if they do not get a moratorium on servicing their own bank loans and are forced to meet all debt obligations on time," CRISIL Rating agency's senior director Krishnan Sitaraman recently said in a report.
A senior Indian Bank Association executive also told CNBC-TV18 on the condition of anonymity that a meeting would be held with large banks on April 18, and such support measures for the smaller NBFCs will be considered.
With SBI extending new loans to support the shadow banks, other banks are also expected to follow suit.
First Published: Apr 16, 2020 1:03 PM IST
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