RBI announces liquidity measures for sectors hit hard by pandemic

Banks can provide fresh lending support to hotels, restaurants, tourism sector & others

In a bid to support revival of sectors hit most by the COVID-19 pandemic, the Reserve Bank of India (RBI) on Friday decided to open a separate liquidity window of Rs 15,000 crore for certain contact-intensive sectors like hotels and restaurants, tourism and aviation ancillary services.

This is in addition to 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 provision of immediate liquidity for ramping up COVID-related healthcare infrastructure and services. This was announced on May 5.

“To mitigate the adverse impact of the second wave on certain contact-intensive sectors, a separate liquidity window of Rs 15,000 crore is being opened till March 31, 2022, with tenors of up to three years at the repo rate,” RBI Governor Shaktikanta Das said while announcing the bi-monthly monetary policy.

Under the scheme, banks can provide fresh lending support to hotels and restaurants; tourism – travel agents, tour operators and adventure/heritage facilities; aviation ancillary services – ground handling and supply chain; private bus operators, car repair services, rent-a-car service providers, event/conference organisers, spa clinics, and beauty parlours/saloons, he said. “Banks will be permitted to park their surplus liquidity up to the size of the loan book created under this scheme with the Reserve Bank under the reverse repo window at a rate which is 25 bps lower than the repo rate or, termed in a different way, 40 bps higher than the reverse repo rate,” he said.