RBI Governor Speech Highlights: RBI Restructuring Relief For Small Borrowers; Liquidity Boost For Healthcare

In order to provide relief for state governments, the RBI has permitted them to remain in overdraft for a maximum of 50 days compared to 36 days earlier. The number of consecutive overdraft days have been increased from 14 days to 21 days.

This overdraft facility pertains to funds states may avail via the RBI’s ‘Ways and Means Advances’ facility.

• Borrowers, including individuals and MSMEs, permitted one-time restructuring till September 30, 2021. This facility will be available for those having an aggregate exposure of Rs 25 crore.
• These borrowers should have been standard as on March 31, 2021.
• Under restructuring 1.0, the period of moratorium can be extended upto a total of 2 years, Das said.
• Banks have been allowed to use counter-cyclical provisions for making provisions for bad loans.

Separately, the RBI has permitted limited KYC to be used till December 1, 2021.

• On-tap liquidity of Rs 50,000 crore at repo rate is being opened till March 31, 2022. Under the scheme banks can support entities including vaccine manufacturers, medical facilities, hospitals and also patients.
• Such lending will get priority sector classification till repayment or maturity.
• Banks to create a Covid loan book under the scheme.
• Such banks can park liquidity equal to Covid loan book at 40 basis points above the reverse repo rate.
• The RBI has announced a targeted long term repo operation for small finance banks of upto Rs 10,000 crore. The funds can be used for lending of upto Rs 10 lakh per borrower.
• SFBs permitted to on-lend to smaller microfinance institutions of asset size upto Rs 500 crore under priority sector.

Second purchase of government securities for Rs 35,000 crore under G-SAP 1.0 will be conducted on May 20, RBI Governor Das said.