RBI EXTENDS LIQUIDITY WINDOW FOR HEALTHCARE

RBI EXTENDS LIQUIDITY WINDOW FOR HEALTHCARE

TOPIC: Economy

Context- The Reserve Bank of India (RBI) on Thursday proposed to extend the term liquidity facility of ₹50,000 crore offered to emergency health services by three months till June 30.

• Last year in May, RBI had announced an on­ tap liquidity window of ₹50,000 crore, at the repo rate with tenors of up to three years, to boost provision of immediate liquidity for ramping up COVID­19­ related health­ care infrastructure and services in the country.

Concept-

On-Tap Term Liquidity Facility to Ease Access to Emergency Health Services

• As announced on May 05, 2021 by RBI, it has been decided to open an on-tap liquidity window of ₹50,000 crore with tenors of up to three years at the repo rate till March 31, 2022 to boost provision of immediate liquidity for ramping up COVID-related healthcare infrastructure and services in the country.
• Under the scheme, banks can provide fresh lending support to a wide range of entities including vaccine manufacturers; importers/suppliers of vaccine and priority medical devices; hospitals/dispensaries; pathology labs and diagnostic centres; manufacturers and suppliers of oxygen and ventilators; importers of vaccines and COVID-related drugs; COVID-related logistics firms and also patients for treatment.
• Banks are being incentivised for quick delivery of credit under the scheme through extension of priority sector lending (PSL) classification.
• Banks may deliver these loans to borrowers directly or through intermediary financial entities regulated by the RBI.
• Under the scheme, such banks will be eligible to park their surplus liquidity up to the size of the COVID loan book with the RBI under the reverse repo window at a rate which is 25 bps lower than the repo rate.