RBI Announces Term Liquidity Facility of Rs. 50,000 Crore For Healthcare

Current GK ( Master) Banking Awareness

05-May-21

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The Reserve Bank of India (RBI) Governor Shaktikanta Das has announced a Covid-19 healthcare package of Rs 50,000 crore on May 05, 2021, for lending to entities such as vaccine makers, medical equipment suppliers, hospitals and related sectors, besides the patients in need of funds for treatment.
The new on-tap special liquidity facility of Rs 50,000 crore will be made available to the banks at the repo rate, for access to emergency health security amid the economic stress due to the second wave of Covid-19 in India.
Banks can give loans under this facility till March 31, 2022.
This Covid loan will be provided for a tenure of up to 3 years and will be classified as priority sector loan till repayment or maturity.
Besides, a Covid loan book mechanism has also been announced for banks, where banks will have an option to place an equivalent amount as lend to borrowers, with RBI at the reverse repo rate plus 40 basis points.
This means that if banks lend Rs 50,000 crore to the borrowers and equivalent amount of Rs 50,000 crore of surplus funds of the system is put in the reverse repo with RBI, they can earn 3.75 percent instead of 3.35 percent.
RBI has also opened up another round of restructuring of loans mechanism for individual and small borrowers for up to two years.
Individual borrowers and small businesses with loan outstanding of up to Rs 25 crore, who have not taken restructuring earlier and were standard as of March 2021, will be considered for restructuring till September 30, 2021.
A special long-term repo operations (LTRO) has been announced for small finance banks (SFBs) worth Rs 10,000 crore, to provide further lending support to NBFC-microfinance institutions (MFIs) and other MFIs (Societies, Trusts etc.) which are members of RBI recognised ‘Self-Regulatory Organisation’. These MFIs must have an asset size of Rs 500 crore, as on 31 March 2021.