Will ensure liquidity of NBFCs, SMEs: Finance Minister

Jaitley’s assurance comes after the shares of housing finance companies came under sudden heavy selling pressure on Friday amid crisis at the Infrastructure Leasing and Financial Services Ltd (IL&FS).

“The Government will take all measures to ensure that adequate liquidity is maintained/provided to the NBFCs, the mutual funds and the SMEs,” the Finance Minister tweeted.

In this regard, both the Reserve Bank of India (RBI) and markets regulator Securities and Exchange Board of India (Sebi) said on Sunday that they were closely monitoring developments in the financial sector and were ready to take appropriate action if required. Also on Sunday, the country’s largest lender -- state-run State Bank of India (SBI) --asked NBFCs not to worry about credit availability as it would continue to support them.

“Some comments are being attributed to the SBI about it being wary of lending to the NBFCs. The rumours are baseless. The SBI lends support to the NBFCs in private and public sectors within the regulatory policy framework and will continue to do so,” SBI Chairman Rajnish Kumar said in a statement.

On the other hand, the recent RBI guidelines on the co-lending model opens up more opportunities for collaboration between the SBI and non-deposit taking NBFCs to increase lending to priority sectors, he added.

According to experts, the recent fall in NBFC stocks is the result of a tightening in the money market and a lack of clarity on IL&FS debt crisis.