The government is discussing a proposal to use its residual Specified Undertaking of Unit Trust of India (SUUTI) holdings to create a facility for boosting non-banking finance companies’ (NBFCs) ability to mobilize funds, reported Financial Express.
As per the proposal, the government will vest the bulk of its SUUTI stakes — worth over Rs 33,000 crore at current market prices — with a special purpose vehicle (SPV) and leverage the asset to raise debt from market at least three times its value, the report added.
According to the report, the funds mobilized will then be used to invest in preferred equity of select cash-starved NBFCs (to be identified on the basis of certain criteria), which in turn will leverage the enhanced equity base to raise funds many time higher from the market.
Though the precise details of the scheme are being worked out, it could probably find place in the Budget speech of finance minister Nirmala Sitharaman, the newspaper quoted sources.