The Reserve Bank of India (RBI) Governor Shaktikanta Das has announced a series of measures to support the nation’s fight against the second wave of COVID-19.
The measures announced include term liquidity facility of Rs 50,000 crore with a tenure of up to three years, at repo rate, to ease access to emergency health services, for ramping up COVID-related health infrastructure and services. Banks can give fresh lending support to a variety of stakeholders under this facility. This lending facility will be available up to 31 March 2022. Banks will be provided incentives to provide credit under this facility.
In order to provide further support to micro, small and other unorganised sector entities, three-year repo operations of Rs 10,000 crore at repo rate, for fresh lending up to Rs 10 lakh per borrower; facility is available up to 31 October 2021.
In view of fresh challenges, SFBs are now permitted to regard fresh on-lending to MFIs with asset size up to Rs 500 crore, as priority sector lending. This facility will be available up to 31 March 2022.
In a move to further incentivise inclusion of unbanked MSMEs into banking system, exemption provided in February 2021, wherein scheduled banks were allowed to deduct credit given to new MSME borrowers from Net Time & Demand Liabilities for calculation of CRR, is now extended to 31 December 2021.
Apart from this, the following set of measures were announced to relieve stress faced by most vulnerable categories of borrowers – individuals, borrowers and MSMEs.
Individuals, borrowers and MSMEs with aggregate exposure up to Rs 25 crore, who have not availed restructuring under any previous frameworks, who were classified as standard on 31 March 2021, will be eligible to be considered under Resolution Framework 2.0.
Restructuring under new framework can be invoked till 30 September 2021 and will have to be implemented within 90 days after invocation.
For individuals and small businesses who have availed restructuring of loans under Resolution Framework 1.0, where moratorium of less than two years was permitted, lending institutions can now increase the period and/or extend residual tenure up to a total period of two years.
In respect of small businesses and MSMEs restructured earlier, lending institutions are now permitted to review working capital sanction limits as a one-time measure.
In a move to rationalise KYC norms for enhanced customer experience steps being proposed include -- a) Extending scope to video KYC for new customer categories such as proprietorship firms. b) Conversion of limited KYC accounts to fully KYC compliant accounts. c) Introduction of more customer-friendly options in KYC updating and d) enabling the use of KYC Identifier of Centralised KYC Registry (CKYCR) for V-CIP and submission of electronic documents as identify proof.
Banks can now use 100 percent of floating provisions held by them, as on 31 December 2020, for making specific provisions for NPAs; such utilisation is permitted up to 31 March 2022.
The maximum number of days of overdraft in a quarter for state governments has been increased from 36 to 50 days. The number of consecutive days of OD has been increased from 14 to 21 days; facility available up to 30 September 2021.