Thursday, August 5, 2021

RBI announces loan relief, ₹50,000 cr liquidity for healthcare and G-sec purchase

The Reserve Bank of India (RBI) today on May 5 announced various measures to protect small and medium businesses, individual borrowers from the unfavourable impact of the second wave of COVID-19 across the country.

Loan restructuring under Resolution Framework 2.0

The RBI announced a Resolution Framework 2.0 for COVID-related stressed assets of individuals, small businesses and MSMEs and also stated its resolve to do everything at its ability to ‘save human lives and rebuild livelihoods through all means possible.

The resurgence of the COVID-19 pandemic in India has made individual borrowers, small businesses and MSMEs most vulnerable, the RBI has allowed individuals, small businesses and MSMEs borrowers having aggregate exposure of up to ₹25 crores, who did not avail restructuring under any of the earlier restructuring frameworks and who were classified as ‘Standard’ as on March 31, 2021, will be eligible for loan restructuring under Resolution Framework 2.0.

Restructuring under the stated framework may be invoked up to September 30, 2021, and shall have to be implemented within 90 days after the invocation, RBI Governor Mr Shaktikant Das said.

₹50,000 crores of fund to support healthcare

The RBI Governor said the central bank will provide a term liquidity window of ₹50,000 crores with a tenure of up to three years at the repo rate of 4 per cent till March 31, 2022, to advance the requirement of immediate liquidity for ramping up Covid-related healthcare infrastructure and services in the country.

Under this scheme, banks can provide fresh lending support to a wide range of entities including vaccine manufacturers, suppliers and importers of vaccines and priority medical devices, pathology labs, hospitals and dispensaries, suppliers and manufacturers of oxygen and ventilators, importers of Covid-related drugs and vaccines, logistics firms and also patients for treatment, RBI Governor Shaktikanta Das said while announcing the measures.

Purchase of G-secs

The RBI announced, it will undertake a purchase of government securities of ₹35,000 crores in the next two weeks under the newly launched GSAP-2.0.

To provide further support to small business units, MSME, and other unorganised sector entities unfavourably affected during the current wave of the pandemic, it has decided to conduct special three-year long-term repo operations (SLTRO) of ₹10,000 crores at a repo rate for the Small Finance Banks (SFBs), to be extended for fresh lending of up to ₹10 lakh per borrower and this facility will be available till October 31, 2021.
Lending by Small Finance Banks to Micro- Finance Institutions for on-lending will be classified as Priority Sector Lending.

To allow the State governments to better control their financial situation in terms of their cash-flows and market borrowings, the maximum number of days of overdraft (OD) in a quarter is being extended from 36 to 50 days and the number of consecutive days of OD from 14 to 21 days.

The RBI will continue to monitor the COVID-19 position in the country, and will use all resources under it, Mr Das said.

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