Opens liquidity window of Rs 15,000 crore for sectors hit hard by pandemic
Mumbai: In a bid to support revival of sectors hit most by the COVID-19 pandemic, Reserve Bank of India on Friday decided to open a separate liquidity window of Rs 15,000 crore for certain contact-intensive sectors like hotels and restaurants, tourism and aviation ancillary services.
This is in addition to on-tap liquidity window of Rs 50,000 crore with tenors of up to three years at the repo rate till March 31, 2022 to boost provision of immediate liquidity for ramping up COVID-related healthcare infrastructure and services in the country. This was announced on May 5.
“In order to mitigate the adverse impact of the second wave of the pandemic on certain contact-intensive sectors, a separate liquidity window of Rs 15,000 crore is being opened till March 31, 2022, with tenors of up to three years at the repo rate,” RBI Governor Shaktikanta Das said while announcing the bi-monthly monetary policy.
The RBI on Friday left key interest rates unchanged at record lows and announced new measures to support the economy after the nascent recovery was pummelled by the devastating second wave of COVID-19 infections.
It brought down its forecast for economic growth by 100 basis points to a 9.5 per cent real GDP growth in the current fiscal year ending March 31, 2022, while the inflation forecast was bumped up by 10 bps to 5.1 per cent.
Under the scheme, banks can provide fresh lending support to hotels and restaurants; tourism – travel agents, tour operators and adventure/heritage facilities; aviation ancillary services – ground handling and supply chain; and other services that include private bus operators, car repair services, rent-a-car service providers, event/conference organisers, spa clinics, and beauty parlours/saloons, he said.
“By way of an incentive, banks will be permitted to park their surplus liquidity up to the size of the loan book created under this scheme with the Reserve Bank under the reverse repo window at a rate which is 25 bps lower than the repo rate or, termed in a different way, 40 bps higher than the reverse repo rate,” he said.
In order to help, the Union finance ministry earlier this week expanded the scope of the Rs 3 lakh crore emergency credit line guarantee scheme, which will now offer concessional loans to hospitals for setting up onsite oxygen generation plants.
Besides, the validity of the scheme has been extended by three months to September 30 and or till guarantees for an amount of Rs 3 lakh crore are issued.
The government has also removed the current ceiling of Rs 500 crore of loan outstanding for eligibility under ECLGS 3.0, subject to maximum additional ECLGS assistance to each borrower being limited to 40 per cent or Rs 200 crore, whichever is lower.
Loans to the civil aviation sector have been made eligible under ECLGS 3.0. The ECLGS 3.0 earlier covered business enterprises in hospitality, travel and tourism, leisure and sporting sectors, which had as of February 29, 2020, total credit outstanding not exceeding Rs 500 crore and overdue, if any, was for 60 days or less, on that date.
To nurture the still nascent growth impulses and ensure continued flow of credit to the real economy, he said, the Reserve Bank had extended fresh support of Rs 50,000 crore on April 7, 2021, to all India financial institutions) for new lending in 2021-22. This included Rs 15,000 crore to the Small Industries Development Bank of India.