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Our Bureau

Mumbai, Nov. 29 The Reserve Bank of India (RBI) has announced further measures for liquidity management and improving credit flow by doubling the period of entitlement of the first slab of post-shipment rupee export credit to 180 days and allowing banks to avail liquidity support from it to accommodate the funding needs of housing finance companies.

The RBI, in a statement said, in view of the difficulties being faced by exporters on account of the weakening of external demand, the period of entitlement of the first slab of post-shipment rupee export credit, currently available at a concessional interest rate ceiling of benchmark prime lending rate (BPLR) minus 2.5 percentage points, would be extended from 90 days to 180 days with effect from December 1, 2008.

Banks have been allowed to avail liquidity support under the Liquidity Adjustment Facility (LAF) through relaxation in the maintenance of Statutory Liquidity Ratio to the extent of up to 1.5 per cent of their Net Demand and Time Liabilities (NDTL) for the purpose of meeting the funding requirements of Housing Finance Companies also. Earlier, banks could meet the funding requirements of only non-banking finance companies and mutual funds under this arrangement.

Further, the RBI, which is presently providing forex liquidity to Indian public and private sector banks having foreign branches or subsidiaries, through forex swaps of tenors up to three months, has decided that this facility, which is available on request, will be made available up to June 30, 2009.

RBI clarified that the facility under which all scheduled commercial banks (excluding Regional Rural Banks) are provided refinance from the Reserve Bank equivalent to up to 1.0 per cent of each bank’s NDTL as on October 24, 2008 at the LAF repo rate up to a maximum period of 90 days could be rolled over. During this period, refinance can be flexibly drawn and repaid. It has decided to continue this facility up to June 30, 2009.

More Stories on : Credit Market | Exports & Imports | RBI & Other Central Banks

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