Measures To Support The Nation: RBI:
The RBI Governor Shaktikanta Das announced a series of measures to support the nation’s fight against the second wave of COVID-19 infections.
- Term Liquidity Facility of Rs. 50,000 crore with tenure of up to 3 years, at repo rate, to ease access to emergency health services, for ramping up COVID-related health infrastructure & services.
- pecial Long Term Repo Operations for Small Finance Banks: In order to provide further support to micro, small, and other unorganized sector entities, 3-year repo operations of Rs. 10,000 crore at repo rate, for fresh lending up to Rs 10 lakh per borrower; the facility is available up to 31 October 2021.
- Lending by Small Finance Banks (SFBs) to MFIs for on-lending to be classified as priority sector lending: 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.
- Credit flow to MSME Entrepreneurs: To further incentivize the inclusion of unbanked MSMEs into the banking system, the 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 December 31, 2021.
- Rationalization of KYC norms for enhanced customer experience: Steps being proposed include –
- Extending scope to video KYC for new customer categories such as proprietorship firms,
- Conversion of limited KYC accounts to fully KYC compliant accounts,
- Introduction of more customer-friendly options in KYC updating and
- enabling the use of KYC Identifier of Centralised KYC Registry (CKYCR) for V-CIP and submission of electronic documents as identify proof
- Floating Provisions and Countercyclical Provisioning Buffer: Banks can now use 100% of floating provisions held by them, as on December 31, 2020, for making specific provisions for NPAs; such utilization is permitted up to March 31, 2022.
- Relaxation of overdraft facility for states: 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 September 30, 2021.
RBI has announced the following set of measures to relieve stress faced by the most vulnerable categories of borrowers – namely individuals, borrowers, and MSMEs.
These are:
- 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 the new framework can be invoked till September 30, 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 a moratorium of fewer than 2 years was permitted, lending institutions can now increase the period and/or extend residual tenure up to a total period of 2 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.
