RBI Announces a Slew of Liquidity Measures for COVID-Related Healthcare Infra, Services Firms

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New Delhi: Amid a major second wave of COVID-19 infections in the country, the Reserve Bank of India (RBI) on Wednesday announced an on-tap liquidity window of Rs 50,000 crore for companies engaged in healthcare infrastructure and services.

The facility of on-tap liquidity with tenors of up to three years at the repo rate will remain open till March 31, 2022, RBI governor Shaktikanta Das said while announcing steps to deal with the impact of the second wave of the pandemic.

Under the scheme, banks may provide fresh lending support to a wide range of entities including vaccine manufacturers, importers/suppliers of vaccines and priority medical devices, hospitals and 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.

These loans will continue to be classified under the ‘priority sector’ till repayment or maturity, whichever is earlier.

“Banks may deliver these loans to borrowers directly or through intermediary financial entities regulated by the RBI. Banks are expected to create a COVID loan book under the scheme,” the governor said.

By way of an additional incentive, he said the banks will be eligible to park their surplus liquidity up to the size of the COVID-19 loan book with the RBI under the reverse repo window at a rate which is 25 bps lower than the repo rate, or termed in a different way, 40 bps higher than the reverse repo rate.

A special long-term repo operations (SLTRO) for small finance banks (SFBs) was also announced by the central bank governor, saying such lenders have been playing a prominent role by acting as a conduit for last mile supply of credit to individuals and small businesses.

“To provide further support to small business units, micro and small industries, and other unorganised sector entities adversely affected during the current wave of the pandemic, it has been decided to conduct special three-year long-term repo operations (SLTRO) of Rs 10,000 crore at repo rate for the SFBs, to be deployed for fresh lending of up to Rs 10 lakh per borrower,” he said.

This facility will be available till October 31, 2021.

Das further said SFBs are now being permitted to reckon fresh lending to smaller MFIs (with asset size of up to Rs 500 crore) for on-lending to individual borrowers as priority sector lending. At present, lending by SFBs to microfinance institutions (MFIs) for on-lending is not reckoned for priority sector lending classification. This facility will be available up to March 31, 2022.

According to CNBC-TV18, individuals and small businesses having an aggregate exposure of up to Rs 25 crore shall be eligible to restructure their loans under the new resolution framework.

The moratorium will be available to those who did not restructure their loans in 2020 and were classified as ‘standard accounts’ as of March 31, 2021.

India recorded 382,315 new infections over the last 24 hours to reach a total of 20.67 million, while deaths rose by a record 3,780 to 226,188, health ministry data showed. Experts say actual numbers could be five to 10 times higher.

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