RBI Allows Banks To Lend Money Against Infra Bonds

Investing in infrastructure bonds has become even more lucrative now. The Reserve Bank of India (RBI) has said that now banks can give loans up to Rs 10 lakh per borrower against investment in long-term infrastructure bonds.

The idea behind this move is to provide liquidity to retail investors. "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.

The tenure of such loans should be within the maturity period of the bonds. One must also note, that banks are not permitted to lend against bonds issued by other banks.

According to banking sector experts, there is no clarity on how this measure will boost increase in loans in the near future. It is just another safe and secure option available for an investor to get a loan.

As of now, banks do lend money against fixed deposits.