The central bank said it would provide Rs 50,000 crore refinance facility for institutions-- NABARD, SIDBI and NHB.
The Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday announced capital support for National Housing Bank (NHB), National Bank for Agriculture and Rural Development (NABARD) and Small Industries Development Bank of India (SIDBI).
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The central bank said it would provide Rs 50,000 crore refinance facility for these institutions.
“These All India Financial Institutions play a big role in meeting the financing requirements in small scale industries, agriculture, MFIs and NBFCs," Das said while announcing a series of steps to help revive the Indian economy in view of the ongoing coronavirus crisis.
Of the total budget of Rs 50,000 crore, Rs 25,000 crore will go to NABARD, Rs 15,000 to SIDBI for providing refinancing to banks for SME loans and Rs 10,000 crore to NHB for refinancing housing finance companies, said Das.
"These amounts have been determined and decided in consultation with these institutions. We will assess the situation and take further measures to step up the liquidity support," he added.
The interest rate for this refinance facility will be charged at repo rate i.e. 4.4 percent.
"The refinancing facility to SIDBI, NABARD and NHB will boost liquidity in the system," said Manju Yagnik, Vice Chairperson, Nahar Group and Vice President NAREDCO.
Meghna Suryakumar, Founder and CEO, Crediwatch also echoed similar views.
"The special package to NABARD, SIDBI and NHB is further expected to infuse liquidity to small agriculture-driven businesses and low income housing," she added.
Besides, central bank would also launch long-term repo operations (TLTROs) worth Rs 50,000 crore to help non-banking financial companies (NBFCs), which have been suffering on account of tight cash conditions.
In another major step, central bank also reduced the reverse repo rate - the rate at which banks park their fund with the central bank - by 25 basis points to 3.75 percent.
First Published: IST