RBI Governor Shaktikanta Das
RBI Governor Shaktikanta Das

A surprise address by the RBI governor Shaktikanta Das amid the ongoing second wave of COVID-19 had be for something important. He ensured that he addressed some issues concerning financial sector as well did what he could to ease pressure among healthcare sector.

What were the they key highlights of Das' address that took place on Wednesday, May 5:

- Special liquidity facility worth Rs 50,000 crore for entities involved in the healthcare sector. 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; manufacturers and suppliers of oxygen and ventilators; importers of vaccines and COVID related drugs; logistics firms and also patients for treatment.

- Banks are being incentivised for quick delivery of credit under the special liquidity facility through the extension of priority sector classification to such lending up to March 31, 2022. These loans will continue to be classified under the priority sector till repayment or maturity, whichever is earlier.

- Banks are expected to create a COVID loan book under the scheme.

- Das announced COVID-related stressed assets resolution framework 2.0 under which individuals, small businesses and MSMEs can restructure loans up to Rs 25 crore, if not availed the facility last year. Restructuring under the proposed framework may be invoked up to September 30, 2021, and shall have to be implemented within 90 days after invocation. In respect of individual borrowers and small businesses, lending institutions are being permitted to use this window to modify such plans to the extent of increasing the period of the moratorium and/or extending the residual tenor up to a total of two years. Other conditions will remain the same.

- RBI relaxes rules for availing overdraft facility for state governments up to September 30.

- The regulator has rationalised KYC compliance norms, provides for video-based KYC for certain categories.

- RBI to do a second purchase of government securities aggregating Rs 35,000 crore in two weeks.

- At present, lending by Small Finance Banks (SFBs) to Micro-Finance Institutions (MFIs) for on-lending is not reckoned for priority sector lending (PSL) classification. In view of the fresh challenges brought on by the pandemic and to address the emergent liquidity position of smaller MFIs, 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. This facility will be available up to March 31, 2022.

- The regulator has decided to conduct special three-year long-term repo operations (SLTRO) of Rs 10,000 crore at repo rate for the SFBs. It is to be deployed for fresh lending of up to Rs 10 lakh per borrower. This facility will be available till October 31, 2021. This can be extended to small business units, micro and small industries, and other unorganised sector entities.

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