Liquidity window for emergency health services extended until June 30

On Thursday, RBI Governor Shaktikanta Das also expressed caution on the impact of the pandemic on banking and non-banking financial corporations (NBFCs) “when the effects of regulatory reliefs and resolutions are fully felt. “.

By Piyush Shukla

The Reserve Bank of India (RBI) on Thursday proposed extending the Rs 50,000 crore ad-lib liquidity window for emergency healthcare services until June 30.

The central bank had introduced the repo rate liquidity window with tenors up to three years on May 5 last year to provide immediate capital for the ramp-up of Covid-related infrastructure and healthcare services. 19.

Banks have also been incentivized to provide credit quickly under the scheme through the extension of the priority sector classification to such loans, the RBI said, adding that lenders should create a Covid-19 loan book in the framework of the program. As an added incentive, these banks were also eligible to park their excess cash, up to the size of their Covid-19 loan book, with the RBI below the reverse repo window at a 25 basis point lower rate. at the repo rate.

Till February 4, lenders have deployed their own funds amounting to Rs 9,654 crore towards Covid-19 related emergency health services, RBI said. “Given the response to the program, it is now proposed to extend this window to June 30, 2022 from March 31, 2022, as previously announced,” he said.

Separately, the central bank has also extended the liquidity window of Rs 15,000 crore for certain contact-intensive sectors until the end of June from the end of March earlier. It had launched the program on June 4, under which loans would be extended at the repo rate with terms of up to three years. Banks were incentivized by being allowed to park their excess cash up to the size of their Covid-19 loan portfolio created under the program.

“Banks willing to deploy their own resources without benefiting from RBI funds under the lending scheme were also eligible for this incentive. The banks have deployed their own funds to the tune of Rs 5,041 crore (until February 4, 2022) to entities under heavy contact in the sector. In view of the response to the mechanism, it is now proposed to extend this window until June 30, 2022,” the central bank said.

On Thursday, RBI Governor Shaktikanta Das also expressed caution on the impact of the pandemic on banking and non-banking financial corporations (NBFCs) “when the effects of regulatory reliefs and resolutions are fully felt. “.

“Banks and other financial entities would be well advised to further strengthen their corporate governance and risk management strategies to strengthen their resilience in an increasingly dynamic and uncertain economic environment. They also need to continue the process of raising capital and building up appropriate buffers,” he said.

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