Covid-19 crisis: RBI announces loan recast for individuals, small businesses

RBI Governor Shaktikanta Das on May 5 announced new measures to tackle the economic impact of the second wave of the deadly coronavirus. The RBI Governor said the situation has reversed from being on the foothills of strong economic recovery to facing a fresh crisis. He assured that the RBI will continue to monitor the situation from the resurgence of COVID-19 cases and deploy all the resources.

Key announcements:

Priority lending by banks for Covid-related healthcare infrastructure

A liquidity window of Rs 50,000 crore with tenure of up to 3 years at repo rate being opened till March 31st, 2022. Under the scheme, banks can support entities including vaccine manufacturers, medical facilities, hospitals, and also patients.

This lending will get priority sector classification till repayment or maturity. Banks will also create a Covid loan book under the scheme

For Individual and small business borrowers

Opening of one-time restructuring for individuals, MSMEs, and small businesses. Individuals and MSMEs borrowers will be permitted one-time restructuring till September 30, 2021. Under restructuring 1.0, the period of moratorium can be extended up to a total of 2 years.

RBI Governor said individuals and small businesses with aggregate exposure of up to Rs 25 crores and those who have not taken restructuring earlier and were classified as standard as of March 31, 2021, will be eligible to be considered. The restructuring may be invoked up to September 30.

Rationalization of KYC compliance norms and provide for video-based KYC for certain categories

Relaxation of the rules for availing overdraft facility for state govt up to Sept 30, 2021

Here is the full address:

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