Tight liquidity conditions have led banks to increase recourseto seeking refinance from the National Housing Bank (NHB) and Small Industries Development Bank of India (Sidbi).

Data from NHB say that banks have sought refinance amounting to Rs 2,045crore in April -June. This figure is much higher as compared to last year's figures which suggest a heightened demand this year.

Amongst the banks availing refinance this quarter were a few associate banks of State Bank of India and Central Bank of India, said an official from NHB.

The amount of refinance sought by banks depends on the business done in specific areas like housing finance and lending to MSMEs.

A senior State Bank of India official said, "The rate charged for refinance is higher (around eight per cent) compared what RBI charges us for borrowing at the liquidity adjustment facility (LAF) window".

Along with NHB, banks have also sought refinance from SIDBI in the first quarter.

"There was good demand for refinance from banks in three months" said senior Sidbi official.