RBI Governor announces loan recast, Rs 50,000 cr liquidity for health infra
In a much-awaited announcement for banks as well as borrowers, Reserve Bank of India (RBI) Governor Shaktikanta Das announced the first set of relief measures to help stakeholders battle the impact of the second wave of Covid-19 infections in the country. The announcements included loan restructuring facilities for individuals, small businesses and Micro, Small & Medium Enterprises (MSMEs) and providing additional liquidity to boost the healthcare infrastructure.While announcing the measures in a last-minute address, the Governor added that the RBI will continue to be proactive throughout the year to deal with the evolving situation and will deploy all available resources and instruments at its command.LOAN RECAST FACILITIES"Individuals, small businesses and MSMEs having an exposure of up to Rs 25 crore and have not availed restructuring under any of the earlier restructuring frameworks shall be eligible to be considered under Resolution Framework 2.0," Das said. These accounts must be standard as of March 31, 2021. The restructuring must be invoked by September 30, 2021, and should be implemented within 90 days after the invocation, Das added."For individual borrowers, small businesses who have already availed restructuring of their loans under Resolution Framework 1.0, where the resolution plan permitted moratorium of less than two years, lending institutions are being permitted to use this window to modify such plans to the extent of increasing the period of moratorium and/or extending the residual tenor up to a total of two years," the Governor announced.Lending institutions have also been permitted a one-time review of working capital sanctioned limits for small businesses and MSMEs.RS 50,000 CR FOR HEALTHCARE LIQUIDITYDas said that in an attempt to ramp up Covid-19 related health infrastructure, an on-tap liquidity window of Rs 50,000 crore will be opened. The tenor for this will be up to three years and the credit will be provided at repo rate."Under the scheme, banks can provide fresh lending support to a wide range of entities including vaccine manufactures; importers/suppliers of vaccines and priority medical devices; hospitals/dispensaries; pathology labs; manufactures and suppliers of oxygen and ventilators; importers of vaccines and Covid-19 related drugs; logistics firms and also patients for treatment," he explained.Banks will be incentivized for delivering credit under the scheme as part of priority sector lending until March 31, 2022. For this facility, banks are now required to create a Covid loan book. They will be further allowed to park excess liquidity up to the size of the Covid loan book with RBI at a rate that is higher than the repo rate by 25 basis points, the Governor said.OTHER MEASURESIn light of the current situation, RBI has decided to conduct the second purchase of government securities for Rs 35,000 crore under the previously announced G-SAP 1.0 on May 20. The Governor also said that a special three-year long-term repo operation (SLTRO) of Rs 10,000 crore will be conducted at repo rate for Small Finance Banks (SFBs).On easing KYC compliance requirements, Das said, "For customer accounts where periodic KYC updating is due or pending, no punitive restriction on operations of customer accounts shall be imposed till December 31."For state governments, the maximum number of days of overdraft in a quarter has been increased from 36 to 50 days and the number of consecutive days from 14 to 21 days.The Governor emphasized that the immediate objective is to save lives and restore livelihoods. "We are committed to go unconventional and devise new responses as and when the situation demands. We must also stay focused on our future, which appears bright even at this juncture, with India set to emerge as one of the fastest-growing economies in the world," he said.