The Bank also introduced the Lombard-type lending facility whereby financial institutions can borrow funds, within the eligible collateral pledged, from the Bank at the official discount rate that is now 0.1 percent. The Bank has widened the range of eligible collateral to asset-backed securities (ABSs) and many other new financial assets.
In addition, from a macro perspective the decelation of headline inflation noticed so far and the expectations of softening of inflation in the months ahead should enable a reduction in nominal interest rates. These developments in turn, would facilitate lending at lower interest rates, making fresh lending more viable and, at least partly obviating the risk aversion of the banks.