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A panel to review current ARCs, priority sector rules to stay 6 more months
To help mitigate the impact of the pandemic and aid economic recovery, the RBI said it will provide new support of 50,000 crore to All India Financial Institutions for new loans in FY22.
As a result, NABARD will benefit from a Special Liquidity Facility (SLF) of 25,000 crore for one year to support agriculture and related activities, the rural non-farm sector and non-bank financial corporations and microfinance institutions. , the RBI said.
A SLF of 10,000 crore will be granted to the National Housing Bank for one year to support the housing sector. SIDBI will receive 15,000 crore under this facility for up to one year for financing micro, small and medium enterprises (MSMEs). All three facilities will be available at the prevailing policy pension rate.
Signaling the importance of Asset Reconstruction Companies (ARCs) in dealing with bad debts, the RBI said it will form a committee to undertake a comprehensive review of how ARCs work in the financial sector ecosystem and recommend action. appropriate to enable these entities to meet the growing demands of the financial sector.
He said that while CRAs have grown in number and size, their potential for resolving stressed assets has yet to be fully realized.
A six-month extension until September 30 for the classification of Priority Sector Lending (PSL) for bank loans to NBFCs for “on-lending” to sectors that significantly contribute to the economy in terms of exports and employment – has been approved.
This would give NBFC a boost to providing credits at the bottom of the pyramid.
