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RBI to provide additional liquidity facility of ₹10,000 crore to NHB, Nabard

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Reserve Bank of India (RBI) governor Shaktikanta Das on Thursday said the central bank will provide additional special liquidity facility of 10,000 crore to National Bank for Agriculture and Rural Development (Nabard) and National Housing Bank (NHB).

The RBI today kept the repo rate, the key interest rate at which it lends to commercial banks, unchanged at 4%. The central bank’s rate setting committee was unanimous in its decision to stand pat on interest rates.

Announcing monetary policy decisions, Das said 5,000 crore will be provided to NHB to support liquidity starved housing finance companies. The facility will be for a period of 1 year and will be charged at repo rate.

“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 5,000 crore to NHB – over and above 10,000 crore already provided – for supporting housing finance companies (HFCs),” the RBI said in a statement.

RBI also announced a separate liquidity line of 5,000 crore for Nabard for refinancing NBFC-MFIs and other smaller NBFCs.

“In order to ameliorate the stress being faced by smaller non-bank finance companies (NBFCs) and micro-finance institutions in obtaining access to liquidity, it has now been decided to provide an additional special liquidity facility (ASLF) of 5,000 crore to Nabard for a period of one year at the RBI’s policy repo rate for refinancing NBFC-MFIs and other smaller NBFCs of asset size of 500 crore and less to support agriculture and allied activities and the rural non-farm sector,” RBI said.

In April, RBI had provided special refinance facility of 65,000 crore to all domestic financial institutions – Nabard, Sidbi, NHB and Exim bank under the covid package.

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