restructuring were disseminated at such meetings. the rbi extended special refinance of $ 1. 4 billion to small industries development bank of india ( sidbi ) to enable it to on - lend to banks and financial institutions towards incremental sme loans. banks were advised to carve out and monitor separate sub - limits of large companies to meet payment obligations to micro and small enterprises. msme ( refinance ) fund of rs. 2000 crore ( $ 400 million ) was instituted and banks were asked to contribute towards this fund against their shortfall in their lending to the weaker sections as low interest deposits with sidbi to be used by the latter for providing assistance to the msme sector. considering the knock on effects on the housing sector, and the role of housing finance companies ( hfcs ) in providing housing loans, the national housing bank ( nhb ) was made available a refinance limit of $ 800 million to assist the sector. as in case of sidbi, banks were asked to deposit specified amount against the shortfall in their lending to the weaker sections with nhb. loans to hfcs were made eligible for the special repo window opened for bank lending to mutual funds. hfcs were also allowed to borrow abroad from bilateral and multilateral agencies with prior approval from the rbi. the period of concessional export credit was extended and the entitlement of banks under the export refinance facility from the rbi was enhanced. export - import bank of india ( exim bank ) was given a special refinance limit of $ 1 billion as also extended a special forex swap facility as in case of banks with overseas branches. rbi ’ s response as debt manager to contain the knock on effects of the global slowdown, the government of india announced three fiscal stimulus packages during december 2008 - february 2009. these stimulus packages were in addition to the already announced post - budget expenditure towards farm loan waiver, rural employment guarantee and other social security programs, enhanced pay structure arising from the sixth pay commission, etc. as a result, the net borrowing requirement for 2008 - 09 increased by nearly 2. 5 times the original projection in 2008 - 09 from 2. 08 per cent of gdp to 5. 89 per cent of gdp. the rbi managed the additional borrowings in a non - disruptive manner through a combination of measures including unwinding under the market stabilisation scheme ( mss ), open market operations and easing of monetary conditions. the

down to 5 per cent. to overcome the problem of availability of collateral of government securities for availing of laf, a special refinance facility was introduced in october 2008 to enable banks to get refinance from the rbi against a declaration of having extended bona fide commercial loans, under a preexisting provision of the rbi act for a maximum period of 90 days. the statutory liquidity ratio requiring banks to keep 25 per cent of their liabilities in government securities was reduced to 24 per cent. these actions of the rbi since mid - september 2008 resulted in augmentation of actual / potential liquidity of nearly $ 50 billion. financial stability objective – rbi ’ s response the immediate result of tightening of the money and credit markets in october 2008 created demands on banks that were already expanding credit well beyond the resources raised from the public by way of deposits. companies which were substituting overseas credit and capital market sources with bank funds started withdrawing funds parked with mutual funds and utilising their undrawn limits with banks. some of the companies that had issued commercial paper in the market – especially the real estate companies and the non banking companies – found it difficult to roll over the maturing paper. the commercial paper and certificates of deposit markets became illiquid and mutual funds started facing severe redemption pressures. hence, in the interest of maintaining financial stability, the rbi instituted a 14 - day special repo facility for a notified amount of about $ 4 billion to alleviate liquidity stress faced by mutual funds, and banks were allowed temporary use of statutory liquidity ratio ( slr ) securities for collateral purposes for an additional 0. 5 per cent of net demand and time liabilities exclusively for this. subsequently, this facility was extended for non banking finance companies ( nbfcs ) and later to housing finance companies as well. the relaxation in the maintenance of the slr was enhanced to the extent of up to 1. 5 per cent of their ndtl. in order to curtail leveraging, commercial banks, all - india term lending and refinancing institutions were not allowed to lend against or buy back cds held by mutual funds. this restriction was relaxed in the context of the drying up of liquidity for cds and cps. considering the systemic importance of the nbfc sector, the government in consultation with the rbi announced the setting up of a special purpose vehicle ( spv ) that could raise funds from the rbi against government - guaranteed bonds to meet the temporary liquidity