Reserve Bank of India governor Shaktikanta Das, on May 5, said in an unscheduled speech that wide-ranging and swift actions were needed against the spread of the second COVID-19 wave. Central bank is monitoring emerging developments.
India has mounted a valiant defence against COVID. The RBI will continue to monitor the emerging situation and deploy all instruments at its command, Das said. Quarantine facility of the RBI continues to operate with more than 200 officers working away from their homes.
Das said the global economic outlook was highly uncertain and clouded with downside risks. Financial markets regained ground on COVID vaccine optimism. Disruption in manufacturing units so far is minimal. Consumption demand is holding up.
He has announced measures to support the economy at a time when India has emerged as the coronavirus hotspot India has already crossed the two-crore mark in total COVID-19 infections caseload. Now, India is just behind the United States and ahead of Brazil.
Here are the key highlights from RBI governor Shaktikanta Das’ speech
-Second purchase of G-SEC for Rs 35,000 cr under G-SAP 1.0 will be conducted on May 20.
-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.
-Banks are being incentivised to extend swift credit to weak sectors. Banks will create a COVID loan book in their balance sheets, and can park money equal to COVID book with RBI at 40 bps above reverse repo rate.
-Borrowers up to Rs 25 crore, not taken restructuring earlier, were standard as of March 2021, will be considered for restructuring till September 30, 2021. Those availing resolution 1.0 can have residual tenure extended to two years. Lenders can review working capital sanction limits for those availing 1.0.
– Small finance banks on-lending to microfinance institutions (MFIs) would be categorised as priority sector amid the ongoing COVID-19 pandemic. This facility for small finance banks will be available till March 31, 2022.
-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. RBI has set a limit of Rs 10 lakh per borrower for the scheme and it will remain open till October 31, 2021.
-In a bid to boost India’s health infrastructure, the Reserve Bank of India announced an on-tap liquidity window of Rs 50,000 crore with the tenor of up to three years at repo rate. RBI Governor Shaktikanta Das said that under the scheme, banks can provide fresh lending support to entities like vaccine manufacturers, importers and suppliers of vaccines, hospitals, dispensaries, logistic firms and patients.
-A set of fiscal measures to help individuals, small businesses and micro-finance institutions tide over the second wave of COVID-19 cases in the country.
The measures included:
> A second purchase of G-SEC for Rs 35,000 cr under G-SAP 1.0 will be conducted on May 20.
> On-tap liquidity of Rs 50,000 crore at repo rate is being opened till March 31, 2022.
> Banks are incentivised to extend swift credit to weak sectors and will create a COVID loan book in their balance sheets. Money equal to COVID book can be parked with the RBI at 40 bps above reverse repo rate.
> Borrowers up to Rs 25 crore, not taken restructuring earlier, were standard as of March 2021, will be considered for restructuring till September 30, 2021.
> RBI will conduct three year long term repo operations for small finance banks with limit of up to Rs 10 lakh per borrower.
> Small finance banks’ on-lending to microfinance institutions (MFIs) to be categorised as a priority sector.
> Resolution Framework 2.0 is targetted at individuals and medium, small and micro enterprises (MSMEs).
> Relaxation in overdraft facility for state governments.
-Normal monsoon forecast to help contain food price inflation as the production is expected to meet the demand in coming times.
-Rationalisation of KYC compliance norms enabling video-based KYC for certain categories.
-Ease in rules for availing overdraft facility for state governments up to September 30, 2021.