RBI announces additional measures to mitigate impact of second Covid-19 wave
Reserve Bank of India (RBI) governor Shaktikanta Das on Friday announced additional measures to tackle the impact of the second wave of Covid-19 on the economy and financial markets. The measures were listed by Das as part of his announcement on the RBI’s monetary policy and, according to him, were taken based on a “continuous assessment” of the situation by the central bank.
Here’s a list of all the additional measures announced by RBI governor Das:
(1.) On-tap liquidity window for contact intensive sectors: A separate liquidity window of ₹15,000 crore opened till March 31, 2022, with tenures of up to three years at the repo rate and kept unchanged at 4 per cent. Under this, banks can provide fresh lending support to hotels, restaurants, travel agents, tour operators, aviation services, private bus operators, car repair services, event or conference managers, spa clinics, beauty parlours and salons.
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(2.) Special liquidity facility to SIDBI: To further support the funding requirements of micro, small and medium enterprises (MSMEs), special liquidity of ₹16,000 crore extended to the Small Industries Development Bank of India (SIDBI). The service to be available at the prevailing repo rate for up to one year, and could be further extended depending on its usage.
(3.) Enhancement of exposure thresholds under resolution framework 2.0: To extend the benefits of resolution framework 2.0 (announced by the RBI on May 5) to a larger set of borrowers, the coverage of borrowers under the scheme expanded by enhancing the maximum aggregate threshold from ₹25 crore to ₹50 crore for MSMEs, non-MSMEs, small businesses and loans to individuals for business purposes.
(4.) Placement of margins of government securities transactions: To ease operational constraints faced by foreign portfolio investors (FPIs), authorised dealer banks allowed to place margins on behalf of their FPI clients for transactions in government securities, within the credit risk management framework of banks.
(5.) Facilitating flexibility in liquid management: Regional rural banks (RRBs) allowed to issue certificates of deposit (CDs) to ensure greater flexibility in raising short-term funds by RRBs. Also, subject to certain conditions, issuers of CDs permitted to buy back CDs before maturity.
(6.) Availability of National Automated Clearing House (NACH) extended: For customers’ convenience, NACH, currently available only on bank working days, proposed to be made available throughout the week effective from August 1, 2021. NACH is a prominent mode of direct benefit transfer (DBT), which facilitates credit transfers such as payment of dividend, interest, salary, pensions etc, as well as payments related to services like electricity, gas, telephone, water etc.
Click here to read the full transcript of the RBI governor’s address.