Tuesday, July 27, 2021

RBI asks PSBs to implement recently announced Covid19 relief steps

Reserve Bank of India (RBI) governor Shaktikanta Das on Wednesday asked state-owned banks to quickly complete measures announced by the RBI recently in the “right earnest”, and to continue focussing on steps to improve the resilience of their balance sheets.

Mr Shakikata Das during a meeting with the Managing Directors and Chief Executive Officers of Public Sector Banks (PSBs) acknowledged the significant role being played by PSBs in extending various banking facilities including, credit facilities to individuals and businesses while tackling the hurdles brought on by the pandemic.

Earlier this month, RBI announced various measures to help the healthcare sector and other entities, in the wake of the second wave of the Covid-19 pandemic.

₹50,000 crore fund to support healthcare

Earlier this month, the RBI Governor had announced that the central bank will provide a term liquidity window of ₹50,000 crore 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, patients and also logistics firms for treatment.

Loan restructuring under Resolution Framework 2.0

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

The RBI had 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 of March 31, 2021, will be eligible for loan restructuring under Resolution Framework 2.0.

Purchase of G-secs

In this measure, RBI had stated that it will undertake a purchase of government securities of ₹35,000 crore.

To provide further support to small business units, MSME, and other unorganised sector entities unfavourably affected during the current wave of the pandemic, RBI had 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.

Overdraft facility to state government

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

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

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