Look into buying top NBFCs’ toxic assets: FinMin to RBI

New Delhi, Nov 28 (IANS) | Publish Date: 11/28/2019 11:15:38 AM IST

With recurring NBFC fiascos like IL&FS and the recent case of DHFL, the government has asked the Reserve Bank of India (RBI) to consider several proposals to de-stress the NBFC sector including the creation of a special fund by the central bank to buy out stressed assets of the top NBFCs.

According to sources, the discussions are going on, although the central bank is not very keen. The fund being mulled is in line with the 2008 “Troubled Asset Relief Programme” (TARP) of US, sources added.

TARP is a programme of the United States government to purchase toxic assets and equity from financial institutions to strengthen its financial sector that was passed by a Democratic Party-controlled Congress and signed into law by Republican Party President George W. Bush on October 3, 2008. It was a component of the government’s measures in 2008 to address the subprime mortgage crisis.

A series of defaults last year by financing firm, Infrastructure Leasing and Financial Services (IL&FS), led to the government taking over its operations. Recently Dewan Housing Finance Corporation Ltd (DHFL), one of India’s largest housing finance companies (HFC), had multiple defaults on interest payments. It has stopped taking deposits and delayed some debt payments, citing cash flow problems.

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