RBI Governor Announces Rs 10,000 Crore Special Liquidity Facility For NABARD, NHB

Reserve Bank of India (RBI) Governor Shaktikanta Das on August 6 announced an additional special liquidity facility of Rs 10,000 crore for NABARD and National Housing Bank.

Das said this additional funding will help NBFCs and housing sector tide over the liquidity crisis, after announcing the bi-monthly monetary policy committee meeting outcome.

Das said Rs 5,000 crore will be provided to NHB and the facility will be for a period of 1 year to be charged at the repo rate. A separate liquidity line of Rs 5,000 crore will be provided to NABARD, Governor Das said.

“In order to shield the housing sector from liquidity disruptions under the prevailing conditions and augment the flow of finance to the sector, it has been decided to provide an additional standing liquidity facility (ASLF) of Rs 5,000 crore to NHB – over and above Rs 10,000 crore already provided – for supporting housing finance companies (HFCs),” the RBI said in a statement.

RBI MPC unanimously voted to retain the policy repo rate at 4 percent to keeping inflation target in mind.

The RBI had in April provided a special refinance facility of Rs 65,000 crore to all domestic financial institutions including NABARD, Sidbi, NHB and Exim bank. This was part of the RBI’s coronavirus relief package.

On the transmission and implications of policy measures announced so far, Das said, “the utilisation of the refinance provided by the Reserve Bank to the National Bank for Agriculture and Rural Development (NABARD), Small Industries Development Bank of India (SIDBI) and the National Housing Bank (NHB) increased to Rs 34,566 crore on July 31, 2020, from Rs 22,334 crore during the May policy.”