The Reserve Bank of India (RBI) on Friday said Banks should lend to stakeholders in the Covid-related healthcare infrastructure and services within 30 days from the date of availing funds from it under the ₹50,000 crore“On-Tap Term Liquidity Facility to Ease Access to Emergency Health Services scheme”.

As per the scheme, there is no tenor restriction regarding lending by Banks. However, they will have to ensure that the amount borrowed from RBI should be backed by lending to the specified segments until the scheme’s maturity.

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The scheme, which opens an on-tap liquidity window of ₹50,000 crore for Banks with tenors of up to three years at the repo rate till March 31, 2022, has been launched to boost immediate liquidity, ramping up Covid-related healthcare infrastructure and services in the country.

The scheme will remain operational from May 07, 2021, till March 31, 2022.

Scope of lending

Banks can provide fresh lending support to a wide range of entities under the scheme, including vaccine manufacturers; importers/ suppliers of vaccine and priority medical devices; hospitals/ dispensaries; pathology labs and diagnostic centres; manufacturers and suppliers of oxygen and ventilators; importers of vaccines and Covid-related drugs; Covid-related logistics firms and also patients for treatment.

RBI will aggregate requests from Banks and release funds every Monday (on the subsequent working day if Monday is a holiday) by initiating a 3-year repo contract with the requesting bank.

If a bank places multiple requests during the week, all such requests will be aggregated, and a single repo contract will be created on the date of operation.

The eligible collateral and margin requirements for availing funds under the scheme will remain the same as applicable for Liquidity Adjustment Facility operations.

Additional incentives

The central bank said Banks could park their surplus liquidity up to the size of the Covid loan book they build in a special 14-day reverse repo window to be conducted on each reporting Friday.

RBI will offer 40 basis points higher interest than the current reverse report rate on such liquidity.

The first such special reverse repo operation will be held on May 21, 2021. These 14-day reverse repo operations would continue till March 31, 2022 and will be reviewed thereafter.

Banks are being incentivised for quick delivery of credit under the scheme through the extension of priority sector lending (PSL) classification to such lending up to March 31, 2022.

RBI said Banks desirous of deploying their own resources without availing funds under the scheme for lending to the specified segments mentioned above would also be eligible for the additional incentives.

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