RBI gives affordable housing an infrastructure status – eases reserve norms for infra bond sales by banks
RBI (Reserve Bank of India)issued a directive on Tuesday that the Infrastructure bonds issued by the banks will have a minimum maturity period of seven years and will not be considered a part of the their net demand and time liabilities (NDTL). RBI also gave the authority to the banks to issue these rupee-denominated bonds via private and public placement route.
RBI issued guidelines to the banks to specify operational norms for flexible structuring and refinancing of new project loans for infrastructure and core industries. The good news is that RBI gave affordable housing an infrastructure status. This is expected to boost the affordable housing sector and the dream of ‘’housing for all by 2022’’ gets a positive thrust.
RBI laid down guidelines for issuance of long-term bonds by banks for financing infrastructure project loans and affordable housing. It exempted such bonds from regulatory rules such as cash reserve ratio (CRR), statuary liquidity ratio and priority sector lending.
RBI also mentioned that there will be no restrictions on the quantum of such bonds to be issued by the banks; however, the regulatory incentives will be restricted to the bonds that are used to incrementally finance long-term projects in infrastructure and loans for affordable housing. Any incremental infrastructure and affordable housing loans acquired from other banks and financial institutions to be reckoned for regulatory incentives will require prior approval.
Source- The Financial Express
affordable banks sector, banking business, Banks, Infra bonds, Infrastructure housing loans, Investment, net demand and time liabilities, Rahul Sabharwal, RBI
