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Ujjivan SFB, Equitas SFB, AU SFB shares gain 4-6% on RBI's SLTRO for small finance banks

The RBI has announced a special long-term repo operation of Rs 10,000 crore for small finance banks at repo rate.

May 05, 2021 / 12:11 PM IST
 
 
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Ujjivan Small Finance Bank, Equitas Small Finance Bank, AU Small Finance Bank and Suryoday Small Finance Bank shares gained 1-6 percent on May 5 after the Reserve Bank of India (RBI) Governor Shaktikanta Das announced a special long-term repo operation (SLTRO) for small finance banks amid the second wave of COVID-19 cases in the country.

The central bank will conduct the special operation of Rs 10,000 crore at repo rate, Das said. “Small finance banks (SFBs) have been playing a prominent role by acting as a conduit for the last-mile supply of credit to individuals and small businesses,” Das said during an unscheduled address.

"To provide further support to small business units, micro and small industries, and other unorganised sector entities adversely affected during the current wave of the pandemic, it has been decided to conduct special three-year long-term repo operations of Rs 10,000 crore at repo rate for the SFBs, to be deployed for fresh lending of up to Rs 10 lakh per borrower,” Das said, adding that the facility would remain open till October 31, 2021.

Also read: RBI Governor Shaktikanta Das launches second round of loan restructuring, other relief measures to counter Covid second wave

The RBI was monitoring the coronavirus situation and its impact on the economy. The global economic outlook is highly uncertain and clouded with downside risks, Das said.

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India has been reporting the highest daily cases in the world as the second COVID-19 wave rips through the country. On May 5, confirmed cases stood at over 3.82 lakh with 3,780 deaths but the recovery rate improved to 82.03 percent from 81.91 percent from the previous day.

In 2020, the impact of the nationwide lockdown was not seen on banks’ earnings because of the emergency measures announced by the central bank and the government. The RBI had announced a six-month moratorium and a subsequent one-time restructuring facility for banks. This had helped banks to escape a huge spike in their non-performing assets (NPAs).

At 1125 hours, Ujjivan Small Finance Bank was up 3.48 percent at Rs 29.75, Equitas Small Finance Bank was up 3.85 percent at Rs 58.05, AU Small Finance Bank was trading 2.01 percent higher at Rs 933.75 and Suryoday Small Finance Bank was up 0.26 percent at Rs 247.10 on the BSE.
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