All India Financial Institutions (AIFIs)
The Reserve Bank of India has turned its attention to meeting the funding requirements of NBFCs, MFIs and housing finance by providing special refinance facilities of Rs 50,000 crore to All India Financial Institutions (AIFIs) such as the NABARD and the SIDBI.
• Announcing a series of liquidity and regulatory measures to ensure economic activity continues amid the COVID-19 outbreak and lockdown, advances under the refinancing route would be charged at repo rate at the time of availment.
• Rs 25,000 crore would be provided to National Bank for Agriculture and Rural Development (NABARD) for refinancing regional rural banks (RRBs), cooperative banks and microfinance institutions (MFIs); Rs 15,000 crore to Small Industries Development Bank of India (SIDBI) for on-lending/refinancing; and Rs 10,000 crore to National Housing Bank.
National Housing Bank (NHB) launched a Special Refinance Facility (SRF) scheme to provide short term loans to housing finance companies (HFCs) and other eligible primary lending institutions (PLIs) which would help them partially mitigate their liquidity risk and improve the liquidity into the overall housing finance system.
The AIFIs play an important role in meeting the long-term funding requirements of agriculture and the rural sector, small industries, housing finance companies,
NBFCs and MFIs.
These are the segments where funding needs are felt the most during the current crisis.
NABARDis a Development Bank with a mandate for providing and regulating credit and other facilities for the promotion and development of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural crafts and other allied economic activities in rural areas with a view to promoting integrated rural development and securing prosperity of rural areas, and for matters connected therewith or incidental thereto.
In discharging its role as a facilitator for rural prosperity NABARD is entrusted with
1. Providing refinance to lending institutions in rural areas.
2. Bringing about or promoting institutional development and
3. Evaluating, monitoring and inspecting the client banks besides this pivotal role.
National Housing Bank is an apex financial institution for housing started by the Government of India in 1988 under the National Housing Bank Act, 1987. It is an apex agency to promote housing finance institutions both local and regional to provide financial and other supports to financial institutions which are involved in housing finance.
Small Industries Development Bank (SIDBI):It took over the responsibility of administering Small Industries Development Bank and National Equity Fund which were earlier administered by IDBI. It is the Principal Financial Institution for the Promotion, Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector and for Coordination of the functions of the institutions engaged in similar activities. The authorised capital of the Bank is Rs. 1000 crore and the paid-up capital is Rs. 450 Crore.
PEPPER IT WITH
AFC, IFC, NBFC-MFI, MGC, SI-CIC
Refinancing window for AIFIs would help offset the impact of tightening of financial conditions in the wake of the COVID-19 pandemic that has made raising funds difficult for these institutions.