The State government will seek the Central government’s intervention to persuade commercial banks to invest in the bonds of Non-Banking Financial Companies (NBFCs) such as the State Financial Corporations (KFC) for offering a life line to the mirco, small and medium enterprises (MSME) deeply impacted by the COVID-19 crisis. The KFC, with an asset size of ₹3,500 crore, falls in the second category of NBFCs. The first auction was conducted on April 23 for ₹25,000 crore at an interest rate of 4.4%. Thomas Isaac told The Hindu that this cold shouldering by the commercial banks could be construed as their reluctance to lend to small and medium sized NBFCs and micro finance institutions. Such interest rates are unviable for the KFC and similar NBFCs that offer financial support to small and medium traders and entrepreneurs at an affordable rate.

Source: The Hindu May 29, 2020 14:26 UTC