RBI creates a special liquidity facility for SIDBI, NABARD, and NHB

RBI has decided to extend a special liquidity facility of Rs16,000 crore to SIDBI for on-lending/ refinancing through novel models and structures, including double intermediation, pooled bond / loan issuances, etc. The facility will be available at the prevailing policy repo rate for a period of up to one year. The special liquidity facility is created to further support the funding requirements of micro, small and medium enterprises (MSMEs), particularly smaller MSMEs and other businesses including those in credit deficient and aspirational districts, it said.

The facility will be available at the prevailing policy repo rate for a period of up to one year. The Reserve Bank may consider further extension of the facility depending on its usage” said RBI Governor.

In the Statement on Developmental and Regulatory Policies announced by RBI on 04.06.2021, it is stated that “To nurture the still nascent growth impulses and ensure continued flow of credit to the real economy, the Reserve Bank had extended fresh support of Rs 50,000 crore on April 7, 2021 to All India Financial Institutions (AIFIs) for new lending in 2021-22”. The fresh support now announced is included a special liquidity facility (SLF) of Rs25,000 crore to National Bank for Agriculture and Rural Development (NABARD) to support agriculture and allied activities, the rural non-farm sector and non-banking financial companies-micro finance institutions (NBFC-MFIs), an SLF of Rs10,000 crore to the National Housing Bank (NHB) to support the housing sector and Rs15,000 crore to the Small Industries Development Bank of India (SIDBI) to meet the funding requirements of micro, small and medium enterprises (MSMEs).

“This facility will be available at the prevailing policy repo rate for a period of up to one year, which may be further extended depending on its usage,” the RBI said.

Surendra Naik