In a bid to boost India's health infrastructure amid the second COVID-19 wave, the Reserve Bank of India on May 5 announced an on-tap liquidity window of Rs 50,000 crore with the tenor of up to three years at repo rate.
The facility will be available till March 31, 2022.
RBI Governor Shaktikanta Das said that under the scheme, banks can provide fresh lending support to entities like vaccine manufacturers; importers/suppliers of vaccines and priority medical devices; hospitals/dispensaries; pathology labs; manufactures and suppliers of oxygen and ventilators; importers of vaccines and COVID related drugs; logistics firms.
Additionally, patients can also be given fresh funds for their treatment, Das said.
RBI Governor Speech LIVE Updates
To incentivise banks to ensure quick delivery of credit under the scheme, RBI has decided to extend priority sector classification for 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, Das announced.
Read: Small finance banks on-lending to MFIs to be categorised as priority sector
Banks may deliver these loans to borrowers directly or through intermediary financial entities regulated by the RBI.
"Banks are expected to create a COVID loan book under the scheme. By way of an additional incentive, such banks will be eligible to park their surplus liquidity up to the size of the COVID loan book with the RBI 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," the Governor added.
RBI governor Shaktikanta Das' speech: Key highlights
Das said that India had flattened the COVID-19 infection curve in March. However, new mutant strains of the virus have emerged.
Wide-ranging and swift actions are needed against the spread of the second wave of COVID-19, he added.
Das also announced additional loan restructuring schemes to help the financial services industry tide over the second coronavirus wave that threatens economic recovery.
Also read: RBI Governor Shaktikanta Das launches second round of loan restructuring, other relief measures to counter Covid second wave
Borrowers with exposure up to Rs 25 crore who didn’t avail earlier facilities and where loans are standard as of March 31, 2021, will be eligible for restructuring in the second round, Das said in his unscheduled speech.
The restructuring under the proposed framework can be invoked up to September 30, 2021, and banks have to implement it within 90 days of invocation.Also read: RBI extends video KYC to proprietorship firms, authorised signatories and more