The RBI on Wednesday allowed certain individual and small borrowers more time to repay their debt and provided a `50,000 crore special window to banks to lend to vaccine makers, hospitals and Covid-related health infrastructure as it looked to cushion the pandemic’s blow to the economy.
The loan recast of up to two years will be available to individuals and small and medium enterprises that did not restructure their loans in 2020 and were classified as standard accounts till March 2021, RBI Governor Shaktikanta Das said.
This facility will be available to borrowers with a total exposure of `25 crore.
As much as 90 per cent of the total borrowers will be covered by this restructuring, according to Indian Banks’ Association.
Last year, the RBI had allowed banks to restructure loans of small borrowers by extending repayment period for up to 2 years.
In the present recast, banks have been allowed to restructure loans through means such as extending tenure or renegotiating interest rate.
Das said RBI will give Rs 50,000 crore of liquidity support to banks to lend to the healthcare sector, including vaccine manufacturers, importers/ suppliers of vaccines and priority medical devices, with tenors up to three years at the repo rate.
This facility will be available until March 31, 2022.
He also announced that RBI will buy Rs 35,000 crore of bonds under the Government Securities Acquisition Programme (G-SAP) -- India’s version of quantitative easing -- on May 20.
Also announced was a special three-year long-term repo operation of Rs 10,000 crore for small finance banks (SFBs), and banks being allowed to maintain lower reserves for advances made to small borrowers.
Just as the economy appeared to be inching back to normalcy, India was hit by a second wave of infections in early April, prompting states and cities to restrict public movements and impose lockdowns, which have hit some businesses hard.
India added 3,82,315 virus cases over the last 24 hours to reach a total of 2.06 crore, while death toll rose by a record 3,780 to 226,188, health ministry data showed.
RBI has been meeting with bankers and shadow lenders (NBFCs) in recent weeks to discuss the economic situation, possible stress to balance sheets and credit flow in the system.
Bankers had reportedly asked the RBI for a three-month moratorium, particularly for retail and small borrowers.
S&P Gobal Ratings on Wednesday said the second wave of COVID inflections may derail a strong recovery in Indian economy and credit conditions. It went on to project a lower than previously anticipated GDP growth rate in different scenarios.
Against 11 per cent GDP growth it had projected March, S&P Ratings saw growth rate dropping to 9.8 per cent under the ‘moderate’ scenario where infections peak in May, and falling to as low as 8.2 per cent under ‘severe’ scenario under which caseload would peak only in late June.
