India’s largest lender, State Bank of India has come to the rescue of NBFCs which have been impacted by defaults by IL&FS and its subsidiaries. The bank has proposed to purchase assets amounting to Rs.45,000 crore from affected NBFCs.
The bank will purchase good quality assets from these NBFCs, providing them funds to improve their liquidity.
SBI had previously planned to buy assets amounting to Rs.15,000 crore, but has increased this to Rs.45,000 crore.
The move is viewed as a positive for both SBI and the NBFCs. According to a report by The Indian Express, SBI is looking to increase its loan portfolio, and this is a good opportunity to do so.
According to the report, a number of NBFCs are facing liquidity issues, with banks choosing not to lend money to them.
IL&FS has consolidated debt to the tune of RS.35,000 crore. Defaults by the organisation have impacted the economy, with the mutual fund industry sharply hit by the same. According to the report by The Indian Express, there has been a 12.6 per cent drop in the assets under management of MFs, with this number falling to Rs.22 lakh crore as of end of September, compared to Rs.25.20 lakh crore in August-end.
Sources: The Indian Express, Times of India.
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