With comfortable liquidity conditions and soft lending rates, banks have had very few occasions to use the Reserve Bank of India’s (RBI’s) refinance window for providing funding support to mutual funds (MFs), housing finance companies (HFCs) and exporters.
The use of special term repo facility for funding MFs, HFCs and non-banking finance companies (NBFCs) was just Rs 90 crore (0.6 per cent) of the limit of Rs 60,000 crore by mid-April, according to the RBI data.
Same trend prevailed for the export refinance facility. The outstanding amount availed under export refinance was Rs 590 crore against the limit of Rs 36,446 crore.
NBFCs, which were facing severe liquidity crunch in October 2008 after the collapse of Lehman brothers, have used the liquidity facility extended by Stressed Asset Stabilisation Fund (SASF) in a very limited way. The outstanding amount stood at Rs 750 crore as against the limit of Rs 25,000 crore. Although, of this limit, the total support from the RBI is limited to Rs 20,000 crore with an option of a further Rs 5,000 crore. But the fact is that only Rs 750 crore was availed of.
The special refinance facility for scheduled commercial banks was also underutilised with only Rs 1,380 crore being used out of a limit of Rs 38,429 crore. Institutions such as Sidbi and the NHB fared much better though while using the limits, taking Rs 5,819 crore and Rs 3,220 crore out of the allowed Rs 7,000 crore and Rs 4,000 crore respectively.
The Export Import Bank of India (Exim) also managed to use half of the allotted Rs 5,000 crore refinance facility by utilising Rs 2,800 crore.
RBI said the total utilisation under the recent refinance/liquidity facilities has been low as overall liquidity conditions remained comfortable. However, their availability has provided comfort to banks/financial institutions, which can fall back on them in case of need.
RBI has extended the tenure of its special refinance facility to provide funding to scheduled commercial banks (excluding regional rural banks) up to March 2010. Banks can get funds up to 1.0 per cent of their net demand and time liabilities (NDTL).
Also, it has extended the tenure of special term repo facility up to end-March 2010. The auction under this facility would now be conducted on a weekly basis as against daily auctions being conducted now.
The central bank had introduced this facility for banks in September 2008 through relaxation in the maintenance of statutory liquidity ratio (SLR) of up to 1.5 per cent of their NDTL for meeting liquidity needs of MFs, NBFCs and HFCs.
The term of export refinance window for banks has also been extended up to March 31, 2010.
