The central bank also extended the deadline to classify non-performing loans (NPAs) as standard by a year in cases of commercial real estate
The Reserve Bank of India (RBI) on February 6 announced a series of steps to boost loan growth to residential real estate, automobile and micro, medium and small enterprises (MSMEs).
"It has been decided that banks will be allowed to deduct the equivalent of incremental credit disbursed by them as retail loans for automobiles, residential housing and loans to MSMEs, over and above the outstanding level of credit to these segments as at the end of the fortnight ended January 31, 2020 from their net demand and time liabilities (NDTL) for maintenance of cash reserve ratio (CRR)," the Reserve Bank said in its statement on Developmental and Regulatory Policies, which it released alongside the Monetary Policy Statement.
"This exemption will be available for incremental credit extended up to the fortnight ending July 31, 2020," it added.
Further, the central bank said the recently-implemented mechanism of linking floating-rate consumer loans and loans to micro and small enterprises to an external benchmark would also be extended to medium-sized enterprises.
RBI extended the one-time restructuring deadline offered to banks towards MSME loans from March 31, 2020 to December 31, 2020."A one-time restructuring of loans to MSMEs that were in default but ‘standard’ as on January 1, 2019, was permitted without an asset
classification downgrade... The scheme has provided relief to a large number of MSMEs... It has been decided to extend the benefit of one-time
restructuring without an asset classification downgrade to standard accounts of GST registered MSMEs that were in default as on January 1, 2020," the RBI said.The central bank also extended the deadline to classify non-performing loans (NPAs) as standard by a year in cases of commercial real estate, where a project was stuck for reasons beyond the control of promoters.