RBI unveils Rs 50K cr plan for Covid care

Tribune News Service

New Delhi, May 5

The Reserve Bank of India has included patients in a special liquidity window of Rs 50,000 crore announced on Wednesday for Covid-related sectors, implying individual and small borrowers would get more time to repay their debt.

Besides patients, the other six eligible sectors are the government, hospitals, pharmacies, manufacturers of vaccines and medical oxygen and private operators in the critical healthcare supply chain, its Governor Shaktikanta Das said during a special address to announce measures for sectors that have borne the brunt of the second Covid wave in the country. The RBI has also asked banks not to penalise till December 31 customers whose periodic KYC updating was due or pending. “The additional measures to fight the second wave are, above all, to help the common man who may be facing a sudden spike in health expenditure and requires a comprehensive targeted policy response,” said Das.

The RBI will also provide Rs 10,000 crore for small financial banks (SFBs) in order to cater to small businesses and financial entities at the grassroots level. The RBI will raise some of the promised funds through an auction of Rs 35,000-crore worth securities on May 20.

The RBI unveiled a loan restructuring plan for individual and small businesses. There are three options—for those who have not availed restructuring, up to two-year modification for those who have availed it and a one-time review of working capital sanctioned limits.

Overdraft (OD) for states till September is being increased from 36 to 50 days and the number of consecutive days of OD from 14 to 21 days. The RBI has also allowed V-CIP (video-based customer identification process) for certain new customers as well as conversion of accounts opened on the basis of Aadhaar e-KYC authentication to fully KYC-compliant accounts.

“The RBI is now focusing on increasingly channelising its liquidity operations, the Governor said.

In order to encourage banks to freely lend the Rs 50,000 crore, which includes patients for treatment, the RBI will provide such lending priority sector classification till March 31 next year. Also, banks will be able to earn 40 bps higher interest on parking surplus liquidity equal to this special loan book with the RBI.

The Rs 10,000 crore facility for SFBs announced by Das is for fresh lending of up to Rs 10 lakh per borrower till October 31. To further incentivise them, lending to smaller MFIs for on-lending to individual borrowers will be considered priority sector lending till March 31, 2022. The RBI also gave a three-month extension under which banks could deduct loans to new MSME borrowers from their net demand and time liabilities (NDTL) for calculation of the cash reserve ratio (CRR).

Liquidity window

The fund support has been earmarked for patients, hospitals, vaccine makers, pharmacies, oxygen supplies and supply chains fighting the pandemic