The Reserve Bank of India (RBI) on Wednesday asked public sector banks (PSBs) to quickly implement the recently announced Covid-19 related measures in right earnest. The measures included providing fresh lending support to entities in emergency health services, and resolution framework 2.0 for Covid-related stressed assets of individuals, small businesses and MSMEs.
In a virtual meeting of PSB chiefs, top brass of RBI, including Governor Shaktikanta Das and four Deputy Governors, issues relating to the current state of the financial sector and credit flows to different sectors, including to small borrowers and MSMEs were also discussed. Further, the meeting took stock of the progress in the implementation of Covid Resolution Framework 1.0 (of August 2020); monetary policy transmission; and implementation of Covid-related policy measures taken by RBI.
The Governor urged the banks to continue focussing on steps to enhance the resilience of their balance sheets.
PSBs hailed
Das acknowledged the important role being played by PSBs in extending various banking facilities including credit facilities to individuals and businesses while tackling the challenges brought on by the pandemic.
To boost immediate liquidity for ramping up Covid-related healthcare infrastructure and services in the country, Das, on May 5, announced opening of an on-tap liquidity window of ₹50,000 crore with tenors of up to three years at the repo rate till March 31, 2022.
Under the aforementioned scheme, banks can provide fresh lending support to a wide range of entities including vaccine manufactures; importers/ suppliers of vaccines and priority medical devices; hospitals/ dispensaries; pathology labs; manufactures and suppliers of oxygen and ventilators; importers of vaccines and Covid-related drugs; logistics firms and also patients for treatment.
Banks incentivised
Banks have been incentivised for quick delivery of credit under the scheme through extension of priority sector classification to such lending up to March 31, 2022.
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 RBI under the reverse repo window at a rate which 40 basis points higher than the reverse repo rate. To alleviate the debt woes of the most vulnerable category of borrowers -- individuals, small businesses and MSMEs, in the wake of resurgence of Covid-19 pandemic in recent weeks, RBI has drawn up the Resolution Framework 2.0 for them.