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RBI announces term liquidity facility of Rs 50,000 crore to boost health infra

RBI announces term liquidity facility of Rs 50,000 crore to boost health infra
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Mumbai: The RBI on Wednesday allowed certain individual and small borrowers more time to repay their debt and provided a Rs 50,000 crore special window to banks to lend to vaccine makers, hospitals and COVID-related health infrastructure as it looked to cushion the pandemic's blow to the economy.

The loan recast of up to two years will be available to individuals and small and medium enterprises that did not restructure their loans in 2020 and were classified as standard accounts till March 2021, RBI Governor Shaktikanta Das said.

This facility will be available to borrowers with a total exposure of Rs 25 crore.

As much as 90 per cent of the total borrowers will be covered by this restructuring, according to Indian Banks' Association.

Last year, the RBI had allowed banks to restructure loans of small borrowers by extending repayment period for up to 2 years.

In the present recast, banks have been allowed to restructure loans through means such as extending tenure or renegotiating interest rate.

Das said RBI will give Rs 50,000 crore of liquidity support to banks to lend to the healthcare sector, including vaccine manufacturers, importers/ suppliers of vaccines and priority medical devices, with tenors up to three years at the repo rate.

This facility will be available until March 31, 2022.

He also announced that RBI will buy Rs 35,000 crore of bonds under the Government Securities Acquisition Programme (G-SAP) — India's version of quantitative easing — on May 20.

Also announced was a special three-year long-term repo operation of Rs 10,000 crore for small finance banks (SFBs), and banks being allowed to maintain lower reserves for advances made to small borrowers.

Just as the economy appeared to be inching back to normalcy, India was hit by a second wave of infections in early April, prompting states and cities to restrict public movements and impose lockdowns, which have hit some businesses hard.

Das said the central bank sees the outlook as 'highly uncertain' and clouded with downside risks, but does not see a major change to inflation forecast.

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