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The Reserve Bank of India (RBI) has decided to extend a special liquidity facility of ₹16,000 crore to the Small Industries Development Bank of India (SIDBI) to support the funding requirements of micro, small and medium enterprises (MSMEs), particularly smaller MSMEs and other businesses, including those in credit-deficient and aspirational districts.
SIDBI can tap this facility for on-lending / refinancing through novel models and structures.
Also read: SIDBI launches quick credit delivery schemes to support Covid-19 preparedness
“This facility will be available at the prevailing policy repo rate for a period of up to one year, which may be further extended depending on its usage,” RBI Governor Shaktikanta Das said.
RBI had extended fresh support of ₹50,000 crore on April 7, 2021 to all-India financial institutions (AIFIs) for new lending in 2021-22. This included ₹15,000 crore to SIDBI.
With the new facility announced on Friday, the total liquidity support to SIDBI goes up to ₹31,000 crore.
Krishnan Sitaraman, Senior Director & Deputy Chief Ratings Officer, CRISIL Ratings, said: “The ₹16,000-crore special liquidity facility through SIDBI will provide some cash-flow relief to MSMEs and small borrowers through refinancing / on-lending.
“This will help beneficiaries recover and stabilise operations once the lockdowns start easing and the business environment improves.”
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