The Reserve Bank of India has decided to provide refinance of Rs 5,000 crore to the Small Industrial Development Bank of India (SIDBI), in a step aimed at easing the liquidity stress in the micro and small enterprises (MSE) sector.
Stating that the MSE sector is "employment intensive and contributes significantly to exports", the RBI said the refinance, under the provisions of Section 17(4H) of the Reserve Bank of India Act, 1934, will be available for direct liquidity support to finance receivables, including export receivables, to MSEs by SIDBI or for liquidity support through selected intermediaries like banks, non-banking financial companies (NBFCs) and state finance corporations (SFCs).
The refinance will be available against receivables outstanding as on November 14, 2013 onwards.
"The facility will be available at the prevailing 14-day term repo rate for a period of 90 days. During this 90-day period, the amount can be flexibly drawn and repaid," the RBI said.
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