RBI provides additional liquidity facility of Rs 5,000 crore to NHB

NEW DELHI: The Reserve Bank of India (RBI) on Thursday provided an additional standing liquidity facility (ASLF) of Rs 5,000 crore to National Housing Bank (NHB). This is over and above Rs 10,000 crore already provided for supporting housing finance companies (HFCs).

The facility will be for a period of one year and will be charged at the RBI’s repo rate.

ASLF is being provided to shield the housing sector from liquidity disruptions and augment the flow of finance to the sector through housing finance companies (HFCs), said Shaktikanta Das, governor, RBI.

In its third bi-monthly monetary, the central bank has decided to keep the repo rate unchanged at 4 per cent. It also kept the reserve repo rate remain at 3.35 per cent. The pause has come after two consecutive rate cuts.

The Marginal Standing Facility (MSF) rate and the Bank rate remain unchanged at 4.25 per cent.

Net foreign direct investment (FDI) moderated to US$ 4.4 billion in April-May 2020 from US$ 7.2 billion a year ago.

For the year 2020-21 as a whole, real GDP growth is also estimated to be negative.

The economic fallout on account of the COVID-19 pandemic has led to significant financial stress for a number of borrowers across the board. The resultant stress can potentially impact the long-term viability of a large number of firms, otherwise having a good track record under the existing promoters, due to their debt burden becoming disproportionate, relative to their cash flow generation abilities.

RBI hence decided to provide a window under the Prudential Framework to enable the lenders to implement a resolution plan in respect of eligible corporate exposures without change in ownership, and personal loans, while classifying such exposures as standard subject to specified conditions.

The framework shall not be available for exposures to financial sector entities as well as central and state governments, local government bodies (e.g. Municipal Corporations).