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RBI, govt consider funding for lending for cheaper loans

The major advantage of such a scheme will be to bring down borrowing rates for housing and auto without cutting policy rates

September 18, 2013 3:03 IST | India Infoline News Service
The Reserve Bank of India and government is considering the option of 'funding for lending' scheme to provide home and auto loans to borrowers at a cheaper, according to a media report.

The central bank along with the ministry of finance is examining the concept of refinancing under the 'funding for lending' scheme that will result in cheaper loans for sectors such as housing and automobiles, the report added.

To achieve this objective, banks will be allowed to borrow from RBI at rates 1%-2% lower than the market under a special scheme, the report further said.

The major advantage of such a scheme will be to bring down borrowing rates for housing and auto without cutting policy rates.

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