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NHB lowers refinance rates in order to transmit the policy rate cuts
The Economic Times  |  June 27, 2019

Dheeraj Tiwari ET Bureau

Housing finance sector regulator has said that in order to transmit the policy rate cuts announced on June 6, it has reduced its refinancing rates.


Earlier this month the Reserve Bank of India (RBI) had announced a 25 basis points or 0.25% rate cut for a third time in a row.


In a tweet, National Housing Bank said that consequent to the policy rate cut by RBI on June 6, NHB has passed on the reduction by way of lowering the refinance rates on disbursements made in the month of June 2019.


“Refinance rates were also lower by about 20 bps in the second fortnight of June over the previous fortnight,” it noted.


NHB offers refinance assistance to housing finance companies in respect of their loans given to individuals for housing.


In 2018-19, it had increased the refinance limit to Rs 30,000 crore for housing finance companies in view of the liquidity position of the sector. As the regulator, NHB regularly monitors the liquidity position of housing finance companies.


With 75 basis point reduction in this calendar year, repo rate now stands at 5.75% from 6%.


RBI Governor Shaktikanta Das had said after the June 6 review that RBI’s expectation is that going forward there will be the higher and faster transmission of rate cuts.


“It has been noticed in the past that it took four to six months for transmission. But this time, the transmission has been faster than that,” he had said noting that banks have already passed on 0.21% of the 0.50% in rate cut effected in the first two rate cuts in January and April 2019.