Govt fund likely in Budget for NBFC relief

New Delhi: The government is likely to unveil in the Union Budget a Troubled Assets Relief Programme (TARP) similar to what the US initiated during the Lehman financial crisis in 2008.

Under the proposed scheme, the troubled or stressed assets of the non-banking finance companies (NBFCs) will be bought by a government fund to revive the sector. A high level review meeting was held on Monday, chaired by Prime Minister Narendra Modi. A final decision will be taken on the matter.

The US government had initiated the TARP at the height of the Wall Street financial crisis of 2008. The US Treasury Department created the TARP fund to stabilise the financial system and restore economic growth. TARP was rolled out to accomplish targets by purchasing troubled companies' assets and stock.

September of 2008 saw a worldwide freeze as global credit markets came to a near standstill as several major financial institutions, such as Fannie Mae, Freddie Mac, and American International Group (AIG), experienced severe financial stress and others, like Lehman Brothers went bankrupt due to the effects of the sub-prime mortgage crisis that had begun the previous year.