RBI Allows Loan Recast for Covid-hit Businesses, Individuals

Reserve Bank on Wednesday announced a slew of measures including loan restructuring for individuals. Small businesses hit hard by the fresh Covid-19 wave.

To augment the supply of goods for Covid care, the central bank opened Rs 50,000 crore on-tap window to ease access to emergency health services to boost the provision of immediate liquidity for ramping up Covid-19 related healthcare infrastructure and services in the country.

This liquidity window is being opened till March 31, 2022, he said, adding that under the scheme, banks can provide fresh lending support to a wide-ranging of entities, including vaccine manufacturers, importers, and suppliers of vaccine and medical devices, oxygen suppliers ventilators importers, hospitals, dispensaries and also patients for treatment. 

"Banks are being incentivised for quick delivery of credit under the scheme, through the extension of priority sector classification to such lending, and these loans will continue to be classified under priority sector till repayment or maturity, whichever is earlier," he said an unscheduled press briefing.

With regard to restructuring he said, borrowers that are individuals and micro, small, and medium enterprises (MSMEs), having aggregate exposure of up to Rs 25 crore would be considered for the new scheme. 

This would be for those who have not availed restructuring under any of the earlier frameworks, including the Resolution Framework 1.0 of RBI, dated August 6, 2020, and who are classified as standard as of March 31, 2021, shall be eligible for the Resolution Framework 2.0, he said. Under the proposed framework, the bank may be invoked up to September 30, and shall have to be implemented within 90 days after the invocation, he added.

RBI has also introduced Rs 10,000-crore special long-term repo operation for small finance banks. Under this, loans up to Rs 10 lakh to MSMEs will be considered as priority sector lending, Das said. Das also announced relaxation in overdraft facility for state governments to enable them to better manage their financial situation in terms of their cash flows and market borrowing. 

Now the maximum number of days of the overdraft, which are only in a quarter, has been increased from 36 to 50 days. RBI also announced rationalisation of certain components of the extent know-your-customer (KYC) norms for enhancing customer convenience.

These include extending the scope to video KYC known as video-based customer identification process, he said. Further, keeping in view the Covid-19 related restrictions in various parts of the country, RBI regulated entities have been asked that for the customer accounts where periodic KYC updating is new or pending, "no punitive restriction on the operation of customer accounts" will be imposed till December 31, 2021, unless warranted, due to any other reason.