The RBI issued instructions to banks specifying operational guidelines and incentives in the form of flexibility in loan structuring and refinancing.

It granted exemptions from regulatory pre-emptions, such as, the CRR, the SLR and Priority Sector Lending (PSL).

As per RBI regulations, banks are required to keep a portion of deposits as CRR with the central bank and park certain portion in government securities known as SLR.

“The objective of these instructions is to mitigate the Asset-Liability Management (ALM) problems faced by banks in extending project loans to infrastructure and core industries sectors, and also to ease the raising of long term resources for project loans to infrastructure and affordable housing sectors” it said.

Banks have been seeking permission for longer tenor amortisation of the loan, say 25 years, with periodic refinancing of balance debt, the RBI said.

It further said rupee denominated bonds should be issued in ‘plain vanilla form’ without call or put option with a fixed or floating rate of interest.

Lending for affordable housing means loans eligible under the priority sector, and loans up to 50 lakh to individuals for houses costing up to 65 lakh located in the six metropolitan centres. For other areas, it covers loans of 40 lakh for houses with values up to 50 lakh.

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