RBI announces measures for Liquidity Mgmt, Improving Credit Flow

Mumbai, Nov 28 (UNI) Reserve Bank of India (RBI) Governor Dr D Subbarao met select bankers from the public, private and foreign banks today, to review the current liquidity and credit situation and to get their views on the way forward.

The meeting was held in the Reserve Bank of India's Central Office here. Deputy Governors Dr Rakesh Mohan, V Leeladhar and Usha Thorat and Executive Director Anand Sinha were present, a RBI release said.

In the review meeting, it was decided to extend the period of entitlement of the first slab of post-shipment rupee export credit, currently available at a concessional interest rate ceiling of the benchmark prime lending rate (BPLR) minus 2.5 percentage points, to exporters from 90 days to 180 days with effect from December one.

It was decided to provide forex liquidity to Indian public and private sector banks, having foreign branches or subsidiaries, through forex swaps of tenors up to three months. It was decided to make this facility available on request up to June 30, 2009.

It was decided to continue a special refinance facility under Section 17(3B) of the Reserve Bank of India Act, 1934, effective from November one, to all scheduled commercial banks (excluding RRBs). They would be provided refinance from the Reserve Bank equivalent up to 1.0 per cent of each bank's NDTL as on October 24 at the LAF repo rate up to a maximum period of 90 days.

It was also decided to expand the liquidity support under the LAF facility, to enable banks to accommodate the funding needs of housing finance companies (HFCs). The end date for this facility, which is currently March 31, 2009, has been extended to June 30, 2009. This facility is intended for fresh credit to MFs/NBFCs/HFCs and for renewal/rollover, on maturity, of existing facilities.

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