The Reserve Bank of India (RBI) in its bi-monthly Monetary Policy Committee (MPC) meeting on Friday, June 4, opened a separate liquidity window of Rs 15,000 crore till March 31 next year to curtail the adverse impact of the second wave of the COVID-19 pandemic on certain contact-intensive sectors. RBI Governor Shaktikanta Das, while addressing the statement, said that the facility will have tenors of up to three years at a repo rate of four per cent. (Also Read: RBI Monetary Policy Highlights: Lending Rates Unchanged, Growth Projected At 9.5% )
This is in addition to the on-tap liquidity window of Rs 50,000 crore with tenors of up to three years at the repo rate till March 31, 2022, to boost the provision of immediate liquidity for ramping up COVID-related healthcare infrastructure and services, which was announced on May 5.
As part of the scheme, banks can now provide fresh lending support to contact-intensive sectors such as hotels and restaurants, travel agents, tour operators, adventure or heritage facilities, aviation ancillary services ground handling and supply chain, and other services that include private bus operators, car repair services, rent-a-car service providers, event/conference organisers, spa clinics, and beauty parlours or saloons.
The banks will be allowed to park their surplus liquidity up to the size of the loan book created under the scheme with the RRBI, under reverse repo window at a rate that is 25 basis points lower than repo rate. Additionally, to support the micro, small and medium enterprises (MSMEs), particularly smaller MSMEs and other businesses including those in credit deficient and aspirational districts, the Reserve Bnak also decided to extend a special liquidity facility of Rs 16,000 crore to SIDBI for on-lending or refinancing through novel models and structures.
”On-tap liquidity window of Rs. 15,000 crore has been announced for banks to provide liquidity relief to the contact intensive sectors that continue to bear the brunt of the pandemic. An additional Rs 16,000 crore funding has been earmarked for SIDBI for lending to MSMEs, directly or indirectly over and above the quantum of Rs 50,000 crore that was set aside for government financial institutions in the April policy.
While the banks’ appetite to take additional exposure to the stressed sectors is yet to be seen, RBI has attempted to create an incentive structure for directing lending to them. In order to provide further relief to the businesses hit by Covid 2.0, the newly announced restructuring window has been extended for all entities with outstanding credit of Rs 50 crore,” said Mr.Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research.