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RBI board approves measures for housing

— PHOTO: PTI

Brainstorming: Governor, deputy governors and other officials at the central board meeting of the Reserve Bank of India in Kolkata on Thursday.

KOLKATA: The Reserve Bank of India on Thursday decided to take further measures to stimulate economic growth, following resolutions considered and passed by the Central Board, which met here.

RBI Governor D. Subbrao said the central bank was ready to follow up last week’s announcements with measures needed to stimulate growth in the economy. “The RBI will continue to closely monitor the developments in the global and domestic financial markets and will take swift and effective action as appropriate.”

As such, the RBI has decided that, in order to provide liquidity support to the housing sector and particularly to housing finance companies (HFCs) adversely affected by the recent financial market developments, a Rs. 4,000-crore refinance facility would be given to the National Housing Bank, which will be available against NHB’s loans and advances to HFCs. This facility will be available till March 31, 2010.

For the exporters, the RBI has decided to provide a Rs. 5,000-crore refinance facility to the EXIM Bank . This is being extended with a view to mitigating the pressures on account of the recent developments on loan disbursements to Indian export companies and for honouring disbursements under export lines of credit. This facility will also be available till March 31, 2010. The objective is to ensure adequate availability of liquidity in the system and maintain conditions conducive for credit flow for all productive purposes, particularly to the housing, export and SME sectors.

Besides the Governor, who chaired the meeting, the board members who were present at the meeting were: Y. H. Malegam, U. R. Rao, Lakshmi Chand, H. P. Ranina, Ashok Ganguly, Azim Premji, Sashi Rajagopalan, Suresh Neotia, A. Vaidyanathan, M. M. Sharma, Sanjay Labroo and deputy governors Rakesh Mohan, Shyamala Gopinath and Usha Thorat.

Later participating in an interactive session organised by the Indian Chamber of Commerce, Ms. Thorat said India was one of the strongest economies in the world and “we should not be too gloomy.” India’s growth might be lower than the previous 8-9 per cent but it was still generated out of the country’s own savings and consumption. However, there were areas of concern like employment generation, the role of micro and small enterprises, she said. “There are challenges and there will have to be an adjustment process which will have to take place. The country’s financial system is more or less in a good shape,” she said. The main aim was to make the adjustment less painful, she remarked.

Dr. Subbarao, who also addressed the members of the Kolkata Bankers Club, advised bankers to maintain credit flow to productive sectors having regard to the slew of measures recently initiated by the RBI.

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