Amid deadly second wave, RBI announces loan restructuring for individuals and MSMEs

The Reserve Bank of India on Wednesday announced a slew of measures, including loan restructuring for individual and small businesses hit hard by fresh COVID-19 wave.

To augment 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 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, hospitals, dispensaries, suppliers of oxygen and ventilators importers, and patients for treatment.

"Banks are being incentivised for quick delivery of credit under the scheme, through 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," said Shaktikanta Das, RBI Governor, at an unscheduled press briefing.

With regard to restructuring he said, borrowers that are individuals and micro, small, and medium enterprises (MSMEs) having an aggregate exposure of upto 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 on March 31, 2021, shall be eligible for the Resolution Framework 2.0, he said.

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Under the proposed framework, the bank may be invoked upto September 30, and shall have to be implemented within 90 days after invocation, he added.

RBI has also introduced Rs 10,000-crore special long-term repo operation for small finance banks. Under this, loans upto 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 fiscal situation in terms of their cash flows and market borrowing.

Now the maximum number of days of overdraft, that are only in a quarter, have 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 were periodic KYC updating is new or pending, "no punitive restriction on operation of customer accounts" will be imposed till December 31, 2021, unless warranted, due to any other reason.