RBI’S MEASURES TO FIGHT COVID-SECOND WAVE
Context
Recently, the Reserve Bank of India (RBI) announced a series of measures to support the nation’s fight against the second wave of Covid-19 infections.
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Term Liquidity Facility for Supporting Healthcare Infrastructure o Term Liquidity Facility of Rs. 50,000 crores with tenure of up to 3 years, at repo rate, to ease access to credit for providers of emergency health services.
o Under the scheme, banks will provide fresh lending support to a wide range of entities, including vaccine manufacturers, importers/suppliers of vaccines and priority medical devices, hospitals/dispensaries, pathology labs, manufacturers and suppliers of oxygen and ventilators, and logistics firms.
Special Long Term Repo Operations for Small Finance Banks o In order to provide further support to micro, small and other unorganized sector entities, 3-year repo operations of Rs. 10,000 crores at repo rate, for fresh lending up to Rs 10 lakh per borrower; facility is available up to 31 October, 2021.
Lending by Small Finance Banks (SFBs) to MFIs for on-lending to be classified as priority sector lending o In view of fresh challenges, SFBs are now permitted to regard fresh onlending to MFIs with asset size up to Rs. 500 crore, as priority sector lending. This facility will be available up to 31 March, 2022.
Stress Resolution Framework 2.0:
o This Framework is to relieve stress faced by most vulnerable categories of borrowers – namely individuals, borrowers and MSMEs.
o Individuals, borrowers and MSMEs who have not availed any restructuring will be eligible to be considered under Resolution Framework 2.0.
o For individuals and small businesses who have availed restructuring of loans under Resolution Framework 1.0, lending institutions can now extend residual tenure up to a total period of 2 years.
Lending institutions are now permitted to review working capital sanction limits, as a one-time measure.