RBI gives affordable housing, rural lending second boost with Rs 10,000 crore facility

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MUMBAI: A new Rs 10,000-crore facility the central bank has offered to the National Bank for Agriculture and Rural Development (Nabard) and the National Housing Bank (NHB) to boost rural lending and affordable housing is expected to ease liquidity concerns at the bottom of the pyramid.

The Reserve Bank of India on Thursday announced the additional special liquidity facility of Rs 5,000 crore each at its policy lending rate to Nabard and the NHB.

Under this, small non-bank finance companies and micro-lenders, which extend small-sized loans to the poor, and housing finance companies focused on affordable lending are going to get liquidity assistance via Nabard and the NHB, respectively.

This is the second support offered to these institutions since the country went into a nationwide lockdown in March. While Nabard got a refinance support of Rs 35,000 crore in April, NHB got Rs 10,000 crore.

The facility to the NHB is to shield the housing sector from liquidity disruptions and augment the flow of finance to the sector through housing finance companies, RBI governor Shaktikanta Das said in a statement. The funds to Nabard will help ameliorate the stress being faced by smaller NBFCs and microfinance institutions in obtaining access to liquidity, he said.

The additional liquidity facility to the NHB “will provide much-required cushioning for the housing finance companies to lower home loan interest rates”, Poddar Housing & Development managing director Rohit Poddar said. “This will translate into an upsurge in demand with a lower cost of credit to the homebuyer and materialise in a likely upsurge in residential inventory offtake, especially in the near onset of festivities in the country.”

Nabard has already disbursed much of the loans earmarked for the entire fiscal year to farmers to meet their kharif crop needs, and for concessional bank refinance in irrigation projects to boost the farm sector post the lockdown.

Nabard has consistently exceeded its lending targets, unlike commercial banks, said Sanjay Kumar, the India chief executive of French food services company Elior. “It is quite likely that this credit flow will spur rural economic activity and in turn give a fillip to rural consumption,” he said.

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