Nabard will; received Rs 25,000 crore for refinancing regional rural banks, cooperative banks and MFIs while Sidbi will get Rs 15,000 crore and NHB Rs 10,000 crore for supporting their respective sectors.Kolkata: Reserve Bank of India has provided a separate liquidity window for the smaller non-bank lenders including microfinance firms responding to their distress calls, as several banks denied the moratorium benefit to them creating cash flow mismatches.
RBI Governor Shaktikanta Das announced Rs 50000 crore targeted long term repo operation (TLTRO 2.0) and mandated banks to invest at least 50% of the fund in investment-grade papers issued by smaller non-bank lenders.
He said the size of this separate TLTRO window may be raised if needed.
“The funds availed by banks under TLTRO 2.0 should be invested in investment grade bonds, commercial paper, and non-convertible debentures of NBFCs, with at least 50% of the total amount availed going to small and mid-sized NBFCs and MFIs,” Das said.
These investments have to be made within one month of the repo auctions, which will be done in tranches.
This is the second TLTRO announced by RBI to ensure availability of liquidity in the market when the economy comes to a grinding halt amid Covid-19 outbreak.
The fund channeled through the first TLTRO has largely been to used by public sector entities and large corporates, while the disruptions caused by coronoavirus have more severely impacted small and mid-sized corporates, NBFCs and micro finance institutions (MFIs), in terms of access to liquidity.
In parallel, RBI has also created a special Rs 50000 crore corpus to enable National Bank for Agriculture & Rural Development (Nabard), Small Industries Development Bank of India (Sidbi) and National Housing Bank to meet the sectoral needs through refinance.
Nabard will; received Rs 25,000 crore for refinancing regional rural banks, cooperative banks and MFIs while Sidbi will get Rs 15,000 crore and NHB Rs 10,000 crore for supporting their respective sectors.