In a bid to help revival of sectors hit most by the COVID-19 pandemic, Reserve Bank of India (RBI) on Friday determined to open a separate liquidity window of Rs 15,000 crore for sure contact-intensive sectors like inns and eating places, tourism and aviation ancillary providers.
This is along with on-tap liquidity window of Rs 50,000 crore with tenors of as much as three years on the repo charge until March 31, 2022 to spice up provision of instant liquidity for ramping up COVID-related healthcare infrastructure and providers within the nation. This was introduced on May 5.
“In order to mitigate the adverse impact of the second wave of the pandemic on certain contact-intensive sectors, a separate liquidity window of Rs 15,000 crore is being opened till March 31, 2022, with tenors of up to three years at the repo rate,” RBI Governor Shaktikanta Das mentioned whereas asserting the bi-monthly financial coverage.
Under the scheme, banks can present contemporary lending help to inns and eating places; tourism – journey brokers, tour operators and journey/heritage amenities; aviation ancillary providers – floor dealing with and provide chain; and different providers that embody non-public bus operators, automotive restore providers, rent-a-car service suppliers, occasion/convention organisers, spa clinics, and sweetness parlours/saloons, he mentioned.
“By way of an incentive, banks will be permitted to park their surplus liquidity up to the size of the loan book created under this scheme with the Reserve Bank under the reverse repo window at a rate which is 25 bps lower than the repo rate or, termed in a different way, 40 bps higher than the reverse repo rate,” he mentioned.
In order to assist, the Finance Ministry earlier this week expanded the scope of the Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS), which can now provide concessional loans to hospitals for organising on-site oxygen era vegetation. Besides, the validity of the scheme has been prolonged by three months to September 30 and or until ensures for an quantity of Rs 3 lakh crore are issued.
The authorities has additionally eliminated the present ceiling of Rs 500 crore of mortgage excellent for eligibility underneath ECLGS 3. 0, topic to most further ECLGS help to every borrower being restricted to 40 per cent or Rs 200 crore, whichever is decrease.
Loans to the civil aviation sector have been made eligible underneath ECLGS 3. 0. The ECLGS 3. 0 earlier coated enterprise enterprises in hospitality, journey and tourism, leisure and sporting sectors, which had as of February 29, 2020, whole credit score excellent not exceeding Rs 500 crore and overdue, if any, was for 60 days or much less, on that date.
To nurture the nonetheless nascent progress impulses and guarantee continued movement of credit score to the actual economic system, he mentioned, the Reserve Bank had prolonged contemporary help of Rs 50,000 crore on April 7, 2021, to All India Financial Institutions (AIFIs) for new lending in 2021-22. This included Rs 15,000 crore to the Small Industries Development Bank of India (SIDBI).
“To further support the funding requirements of micro, small and medium enterprises (MSMEs), particularly smaller MSMEs and other businesses including those in credit deficient and aspirational districts, it has been decided to extend a special liquidity facility of Rs 16,000 crore to SIDBI for on-lending/refinancing through novel models and structures,” he mentioned.
This facility will probably be out there on the prevailing coverage repo charge for a interval of as much as one 12 months, which can be additional prolonged relying on its utilization, he mentioned.
To present better flexibility in elevating short-term funds by Regional Rural Banks (RRBs), Das mentioned, it has now been determined to allow these banks to challenge Certificates of Deposit (CDs) to eligible traders.
“With a view to providing issuers with greater flexibility in liquidity management, it has also been decided that all issuers of CDs will be permitted to buy back their CDs before maturity, subject to certain conditions,” he mentioned.
In December 2020, the RRBs had been permitted to entry the liquidity home windows of the Reserve Bank in addition to the decision/discover cash market so as to facilitate extra environment friendly liquidity administration by the RRBs at aggressive charges.