India Central Bank Unveils Measures To Counter COVID-19 Impact

India’s central bank unveiled a slew of measures on Wednesday as the second wave of the coronavirus pandemic cause severe strains on healthcare and medical facilities.

In an unscheduled speech, Reserve Bank of India Governor Shaktikanta Das announced that the central bank will provide an on-tap liquidity window of INR 500 billion, in order to provide immediate liquidity to the emergency healthcare infrastructure and services.

Under this scheme, banks can provide fresh lending support to a wide range of entities like vaccine manufacturers, importers and suppliers of vaccines and priority medical devices, hospitals and dispensaries, and other operators in the healthcare sector.

Logistics firms and patients are also eligible for credit. These loans will be classified under the priority sector till repayment or maturity, whichever is earlier.

Further, 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 central bank under the reverse repo window at a rate which is 25 basis points lower than the repo rate.

The governor said small businesses and financial entities at the grassroots level are bearing the biggest brunt of the second wave of infections.

Borrowers with an aggregate exposure of upto INR 250 million who have not availed restructuring facilities earlier and has been classified as ‘standard’ would be eligible for the restructuring under the proposed framework until September 30, 2021.

As one-time measure, banks are allowed to review the working capital sanctioned limits of small and medium sized businesses, which were restructured earlier. Those who availed restructuring facility earlier can be given up to two years of moratorium.

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