NABARD issues refinance policy under Special Liquidity Facility

May 02, 2020 | by Avantis RegTech Legal Research Team

Industry Specific Compliance

The National Bank for Agricultural and Rural Development (NABARD) on April 23, 2020, issues refinance policy to Regional Rural Banks (RRB), Cooperative Banks and Micro Finance Institutions (MFIs) under Special Liquidity Facility (SLF).

The NABARD has taken several measures to reduce disruptions and maintain unhindered flow of credit to financial institutions and for helping farmers and unreached segment of society to meet their credit needs are as follows: - 

1. The refinance will be extended to Non- Banking Financial Company (NBFC) – MFIs. However, SLF is for a period of one year or less. 

2. The amount would normally be repayable in a period of 18 months, however the SLF from RBI is for one year from the date first drawl by NABARD. 

3. The borrowing MFls must repay the proportionate amount of the balance period in one lump sum at the end of such period. The remaining amount of refinance must be repaid in one or more instalments as per repayment schedule stipulated in the sanction letter. The penal interest and prepayment penalty shall be as per the clause 5 of policy circular No. 92/ DOR-20/ 2020. 

4. Balance amount of refinance provided from NABARD's own resources will be charged at a rate as applicable to normal lending.

5. The proposal of refinance may be submitted through Regional officers of NABARD where the corporate / head office of NBFC – MFI is located.


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