RBI allows banks to lend against infra bonds

MUMBAI: Individuals can now get loans up to Rs 10 lakh from banks against their investment in long-term infrastructure bonds issued by same lenders, the Reserve Bank of India ( RBI) said in a notification on Thursday.

“In order to provide liquidity to retail investors in such bonds, it has been decided that banks can extend loans to individuals against long-term bonds issued by them…,” RBI said.

“Tenure of loan should be within the maturity period of the bonds. Banks are not permitted to lend against such bonds issued by other banks.” It has asked bank boards to lay down a policy in this regard. “The RBI measure will increase liquidity in infra bonds,” said Ashutosh Khajuria, head-treasury, Federal Bank.

“Thus, it will also help attract retail investors in this segment.” Banks can issue infrastructure bonds with a minimum of 7-year maturity.