RBI infuses ₹5,000-cr in National Housing Bank

The Reserve Bank of India (RBI) has extended an additional liquidity facility (ASLF) of ₹5,000 crore to National Housing Bank (NHB). It is over and above ₹10,000 crore already provided for supporting the housing finance companies (HFCs). The facility will be for one year and will be charged at the RBI‘s repo rate. RBI Governor, Shaktikanta Das, informed that the ASLF is being provided to shield the housing sector from liquidity disruptions and to augment the flow of finance to the sector through housing finance companies (HFCs). In the third bi-monthly monetary, the central bank has decided to keep the repo rate unchanged at 4 per cent and kept the reserve repo rate at 3.35 per cent. The Marginal Standing Facility (MSF) rate and the Bank rate remain unchanged at 4.25 per cent. The economic fallout on account of the COVID-19 pandemic has led to financial stress for the borrowers across the board. The stress can 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. The RBI has decided to provide a window under the Prudential Framework to enable lenders to implement a resolution plan in respect of eligible corporate exposures without any change in ownership, and personal loans, while classifying such exposures as standard subject to specified conditions.