In order to boost the housing sector, the government on Friday announced providing liquidity of ₹10,000 crore for individual housing loans.

“The National Housing Bank (NHB) is making available from August 2, a liquidity infusion facility of ₹10,000 crore for Housing Finance Companies as additional liquidity for individual housing loans, for affordable housing,” a Finance Ministry statement said. This will be over and above the two existing refinance schemes of the NHB.

Issues related with affordable housing loan along with those of MSMEs, retail and automobile sectors will be taken up during meeting of the Finance Minister with heads of all banks (public as well as private) scheduled to take place on Monday. The meeting will also discuss areas of priority for the banking sector in the coming months for accelerating GDP (Gross Domestic Product) growth.

Budget proposals on NBFCs

The Ministry also announced that the government has approved the modalities on one-time partial credit guarantee to public sector banks for purchase of high-rated pooled assets of financially sound NBFCs, as announced in the Budget.

“Financial Services Department would put in place for an oversight mechanism for this scheme,” the statement said.

In the Budget it was announced that NBFCs that are fundamentally sound should continue to get funding from banks and mutual funds without being unduly risk averse. Accordingly, for purchase of high-rated pooled assets of financially sound NBFCs, amounting to a total of ₹1 lakh crore during the current financial year, the government will provide a one-time six months’ partial credit guarantee to public sector banks for first loss of up to 10 per cent.

Later the RBI announced providing required liquidity backstop to the banks against their excess G-sec holdings.

Also, the RBI decided to frontload the FALLCR (Facility to Avail Liquidity for Liquidity Coverage Ratio) scheduled to increase by half a percentage point each in August and December 2019 and permit banks to reckon with immediate effect the increase in FALLCR of one percentage point of the bank’s NDTL (Net Demand and Time Liabilities ), to the extent of incremental outstanding credit to NBFCs and Housing Finance Companies (HFCs) over and above the amount of credit to NBFCs/HFCs outstanding on their books as on date.

All these will enable the banks to avail themselves of additional liquidity of ₹1.34 lakh crore.

Meeting on MSME

The Finance Minister will be holding an inter-ministerial meeting on issues related with Micro, Small and Medium Enterprises (MSMEs). The meeting will consider various recommendations given by Expert Committee headed by former SEBI Chief UK Sinha.

This committee submitted its report in June and gave over 100 recommendations. These recommendations encompass various domains such as credit, equity, funding, technology, marketing, delayed payments, institutional arrangements, need for legislative changes, rural enterprises, Self Help Groups, risk mitigation etc.

 

 

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