RBI booster 2.0: Housing finance to get Rs 50,000 crore refinancing facility

Shaktikanta Das on Friday announced a refinancing facility worth Rs 50,000 crore to boost the housing finance sector. NABARD (Rs 25,000 crore), SIDBI (Rs 15,000 crore) and NHB (Rs 10,000 crore) would be the beneficiaries. They will be charged at the repo rate of 4.4 per cent for this amount. The companies had earlier asked the government to help them with liquidity as they were suffering on account of tight liquidity conditions. In a separate devlopment, the government has allowed non-banking financial companies (NBFCs), housing finance companies (HFCs) and microfinance institutions (MFIs) to operate with bare minimum staff amid the extended lockdown.

The RBI would also conduct another targeted long-term repo operation (TLTRO) for an aggregate amount of Rs 50,000 crore to begin in tranches for small and mid-sized MFI-NBFCs. The banks would be required to invest 50 per cent of funds under TLTRO 2.0 to small and mid-sized NBFCs, it added. The RBI also cut the reverse repo rate cut by 25 bps. However, all other policy rates remain the same. The reverse repo rate now stands at 3.75 per cent from 4 per cent.

The RBI on March 27 announced a slew of economic relief measures approved by the Monetary Policy Committee (MPC) to tackle the sluggishness in the economy due to coronavirus lockdown. In its last MPC meet, the repo rate was cut by 75 bps to 4.4 percent, and reverse repo rate by 90 bps. In addition, the central bank reduced the cash reserve ratio (CRR) to 3 per cent from 4 per cent.

Meanwhile, Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman met on Thursday amid speculation that another stimulus package may be announced soon by the government to aid the sectors hit hard by the lockdown. In March, the government announced a Rs 1.7 lakh crore relief package along with insurance cover for frontline medical personnel. The government also promised to give free cereals and cooking gas apart from cash through direct transfers for three months. India is currently under an extended lockdown until March 3 to fight against the fast spreading coronavirus pandemic.

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Also read: Coronavirus effect: RBI cuts reverse repo rate by 25 bps to 3.75%, maintains status quo on repo rate