Mumbai: Even while the banking system's liquidity has turned to a surplus in the last one month, liquidity for the NBFC sector may still remain constrained. However, the government is working to address the liquidity shortage for the NBFC sector, a top government official said on Friday.
Speaking at an event in New Delhi, Finance Secretary Subhash Chandra Garg said liquidity has been in surplus at the aggregate level for the last four weeks.
"The system on an average is having surplus liquidity of Rs 1 lakh core since June," he said.
However, he added that there could be funding problems for some NBFCs, which is being addressed by the government.
Madhavi Arora, Economist, Forex and Rates, Edelweiss Securities, said, "While the system liquidity is fine on a general basis, the targeted liquidity is still constrained for the NBFC sector. There is a credit risk premia attached to liquidity for the NBFC and housing finance sectors."
"The fall on corporate bond yields, especially NBFC yields, has not been commensurate with the fall in G-sec yields," added Arora.
In a bid to address the stress in the sector, the government in the Budget has proposed that public sector banks would purchase high-rated pooled assets of financially sound NBFCs, amounting to a total of Rs 1 lakh crore during the current financial year.
For this, the government will provide one-time six months' partial credit guarantee to public sector banks for first loss of up to 10 per cent.
