In order to improve credit availability in a fledgling economy, the Reserve Bank of India (RBI) will provide an additional special liquidity facility of Rs 10,000 crore to National Bank for Agriculture and Rural Development (Nabard) and National Housing Bank (NHB).
Announcing the monetary policy decisions on Thursday, RBI governor Shaktikanta Das said Rs 5,000 crore will be provided to NHB to support liquidity starved housing finance companies. The facility will be for a period of one year and will be charged at repo rate. The RBI also announced a separate liquidity line of ₹5,000 crore for Nabard for refinancing NBFC-MFIs and other smaller NBFCs.
The RBI has taken heed to the call of industry leaders and is open to the idea of the one-time restructuring of loans. A committee under the chairmanship of former chairman of ICICI and BRICS Bank, K.V. Kamath, will be set up for resolution plans. Stressed MSME borrowers will be made eligible for debt restructuring under the existing framework, where accounts were standard as of March 31.
Addressing the post-MPC meeting press briefing, Das said the market financing conditions for NBFCs have stabilised due to abundant liquidity. "On the back of abundant liquidity, borrowing costs for NBFCs and non-NBFCs have significantly come down. Easing of financial conditions has enhanced transmission," he said.
In addition, the governor also announced that the loan-to-value ratio for gold loans is being increased to 90 per cent from 75 per cent.
The RBI also kept the lending rate unchanged at 4 per cent in its bi-monthly MPC. The reverse repo rate will also remain unchanged at 3.3 per cent and the central bank will continue with an accomodative monetary policy.