The Reserve Bank of India (RBI) on Thursday announced Rs 9,000 crore of refinance facility to Exim Bank and the housing sector, thereby providing significant liquidity support to the corresponding sectors. The refinance facility, available for a period of 90 days, will be given at the current repo rate of 6.5%.
Following the central board meeting, Reserve Bank of India governor Duvvuri Subbarao said, “The way forward is uncertain. It is not possible to calibrate a precise road map of what we can do and when.”
On a day when inflation is at the eight-month low at 8% by the November end, he said: “The monetary policies we have taken have resulted in positive outcome. We reduced the repo rate and the reverse repo rate on last Saturday. We expect the banks to cut their lending rates and keep credit flowing to productive sectors.”
Iterating that Reserve Bank of India would work at minimising the stress on the economy, Subbarao said the sharp fall in inflation would be considered at the next scheduled policy review on Jan 24.
A day after describing 2009-10 as a ‘more difficult year’, Subbarao said, “We have adjusted the CRR as well as the policy rates thrice over the last few months. Going forward, we will do whatever appropriate at the appropriate time.”
The central bank provided Rs 5,000 crore refinance facility to the Exim Bank at the prevailing repo rate for a period of 90 days. The amount can be flexibly drawn and repaid within the period. At the end of the stipulated period, the drawal can also be rolled over.
In a bid to help the lending for housing sector through the housing finance companies, it also decided to provide an amount of Rs 4,000 crore to the National Housing Bank (NHB) against its loans and advances to housing finance companies. The utilisation of the funds will be governed by the policy approved by the board of NHB. Both the refinance facilities will be available till March 31, 2010.