RBI's stimulus: A step in right direction to mitigate Covid impact
RBI has adopted timely measures to help the borrowers reeling under the impact of Covid-19. Today’s #TM Feature explores the impact of the various schemes that RBI has announced.
The Reserve Bank of India (RBI) has announced various relief measures to mitigate the impact of Covid and subsequent lockdown announced by various states.
With this, the RBI has extended the one-time restructuring scheme, which was announced last year. It has now been extended only to stressed borrowers. This may include individuals, small businesses, and MSMEs having a total exposure of up to Rs 25 crore on account of the resurgence in COVID-19 cases.
Extension of Restructuring Scheme
Borrowers, classified as ‘standard’ as of 31st March 2021, will be eligible for restructuring under this Resolution Framework 2.0. The banks are given time till 30th September 2021 to invoke a resolution plan for the stressed accounts and implement it within 90 days from the invocation date. The scheme also allows the extension of the moratorium period up to a period of two years, in cases where it is not already provided.
Additional Liquidity Facility for SFBs
The central bank has also announced a special liquidity window to the tune of Rs 10,000 crore for small finance banks (SFBs). This facility will be provided through special three-year long-term repo operations (SLTRO).
The MSFs can use these funds for fresh lending with the largest ticket size of Rs 10 lakh per borrower. The window will be available till 31st October 2021.
COVID-19 Loan Book
RBI has also provided an on-tap special liquidity window of Rs 50,000 crore for banks. These funds will be utilized to improve healthcare infrastructure in India. The bank will need to create Covid-19 Loan Book for the same.
Other Important Announcements
RBI has also allowed banks to use 100% of floating provisions towards making specific provisions for NPAs till 31st March 2022. It will reduce the quantum of additional provisioning in coming quarters for banks.
Teji Mandi (TM Investment Technologies Pvt. Ltd.) is a SEBI registered investment advisor. No information in this article should not be construed as investment advice. Please visit www.tejimandi.com to know more.