Governor Das had been holding discussions with banks and NBFCs for some time about the ground situation on liquidity, credit flow and balance sheets. According to a section of the media, lenders had sought relief such as payment moratoriums.
To help all stakeholders in the Covid fight, Das announced an on-tap liquidity facility of Rs 50,000 crore to ease access to healthcare services. Under this, banks will be permitted to provide fresh lending support to vaccine makers, manufacturers, logistic firms, etc. Banks are being incentivised to sanction these loans under priority sector classifications, the Governor announced.
Here are the specifics of Das’ address:
— On-tap liquidity of Rs 50,000 crore at repo rate. Under this, banks can support healthcare stakeholders like vaccine makers, hospitals, medical equipment makers as well as patients till March 31, 2022.
— Till repayment or maturity, such lending will be considered priority sector lending. Under this scheme, a special loan book will be created by banks.
— Banks can park liquidity equal to their Covid loan books at 40 basis points above the reverse repo rate.
— A targeted long term repo operation up to Rs 10,000 crore will be started for small finance banks. The upper limit is Rs 10 lakh per borrower.
— Small finance banks can now on-lend to smaller MFIs of asset size up to Rs 500 crore.
— The RBI will allow states to remain in overdraft for a maximum of 50 days. The limit was 36 days earlier. Besides, the number of consecutive overdraft days will go up to three weeks from two weeks earlier. This facility pertains to funds under the Ways and Means Advances.
— Individuals and MSMEs borrowers can avail one-time restructuring till September 30, 2021. This covers those having exposure up to Rs 25 crore, and those that were standard as of March 31 this year.
— The moratorium period under restructuring 1.0 can now be extended up to 2 years.
— Banks can use counter-cyclical provisions for the purpose of bad loan provisioning.
— Rationalisation of KYC compliance. Limited KYC can now be used till December 1, 2021.
While announcing these measures, Das summed up India’s current economic situation thus:
— India was poised for growth at the turn of the year.
— But the situation has drastically changed now, although India has mounted a valiant challenge.
— The RBI will deploy all resources at its disposal to counter the impact of the virus.
— Have faith in India’s ability to come out of Covid-19 crisis, Das said.
— RBI’s quarantine facility continues to operate, with 200 central bank personnel recuperating.
— Impact on demand will be moderate because businesses have learnt to survive despite restrictions and containments.
— Aggregate supply conditions underpinned by strength of agriculture sector.
— Good monsoon expectation to keep rural demand strong.
— Don’t expect any broad deviations from inflation projections made in April.
— Domestic financial conditions remain easy owing to ample liquidity.