The RBI Governor has announced a series of measures to support the nation’s fight against the second wave of COVID-19 infections.
Key takeaways
Term Liquidity Facility of Rs. 50,000 crore with tenure of up to 3 years, at repo rate, to ease access to emergency health services, for ramping up COVID-related health infrastructure & services.
Special Long Term Repo Operations for Small Finance Banks (SFBs): In order to provide further support to micro, small and other unorganized sector entities, 3-year repo operations of Rs. 10,000 crore at repo rate, for fresh lending up to Rs 10 lakh per borrower (till 31 October, 2021)
Lending by SFBs to MFIs to be classified as priority sector lending: In view of fresh challenges, SFBs are now permitted to regard fresh on-lending to MFIs with asset size up to Rs. 500 crore, as priority sector lending (till 31 March, 2022)
Credit flow to MSME Entrepreneurs: To incentivize inclusion of unbanked MSMEs into banking system, exemption provided in February, 2021 wherein scheduled banks were allowed to deduct credit given to new MSME borrowers from Net Time & Demand Liabilities for calculation of CRR, is now extended to December 31, 2021.
Rationalization of KYC norms for enhanced customer experience: Steps being proposed include –
Extending scope to video KYC for new customer categories such as proprietorship firms,
Conversion of limited KYC accounts to fully KYC compliant accounts,
Introduction of more customer-friendly options in KYC updating and
enabling the use of KYC Identifier of Centralised KYC Registry (CKYCR) for V-CIP and submission of electronic documents as identity proof
Floating Provisions and Countercyclical Provisioning Buffer: Banks can now use 100% of floating provisions held by them, as on December 31, 2020, for making specific provisions for NPAs; (till March 31, 2022)
Relaxation of overdraft facility for states: Maximum number of days of overdraft in a quarter for state governments has been increased from 36 to 50 days.
