RBI Policy
To harmonise non-fund based facilities across regulated entities
This story was originally published at 11:52 IST on 9 April 2025
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--RBI Malhotra: To issue comprehensive guidelines for non-fund based entities
MUMBAI – The Reserve Bank of India has decided to "harmonise and consolidate" guidelines of non-fund based facilities across all regulated entities, Governor Sanjay Malhotra said in the monetary policy statement Wednesday.
Non-fund based facilities are services extended by banks in terms of guarantees instead of loans, giving an assurance to the third party or seller. The facility includes guarantees, letters of credit, and co-acceptances, among others. Such services play a key role in facilitating effective credit intermediation, besides enabling seamless business transactions, including trade transactions, Malhotra said.
The revised guidelines include a review of instructions on issuance of partial credit enhancement by regulated entities to broaden funding sources for infrastructure financing. In Union Budget for 2025-26 (Apr-Mar), Finance Minister Nirmala Sitharaman announced the National Bank for Financing Infrastructure and Development will set up a partial credit enhancement facility for corporate bonds in the infrastructure sector. The draft guidelines will be issued later on Wednesday to seek public comments, Malhotra said.
The MPC lowered the policy repo rate by 25 basis points to 6.00% in a unanimous decision, Malhotra said Wednesday. The committee also changed the policy stance to 'accommodative' from 'neutral', which was adopted in October. End
Reported by Christina Titus
Edited by Deepshikha Bhardwaj
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