RBI MEASURES TO TACKLE COVID-19 BURDEN
- May 6, 2021
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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RBI MEASURES TO TACKLE COVID-19 BURDEN
Subject : Economics
Context: The RBI Governor Shaktikanta Das announced a series of measures to support the nation’s fight against the second wave of COVID-19 infections.
Concept :
- Term Liquidity Facility
- Term liquidity facility of Rs. 50,000 crore with tenure of up to 3 years, at repo rate, to ease access to emergency health services, for ramping up COVID-related health infrastructure & services.
- Financial institutions with short liquidity positions could borrow from BOT via repurchase transactions using an extended list of eligible securities.
- This term liquidity facility aims to provide funding for financial institutions in an efficient and effective manner so as to help maintain stability in the financial system.
- Special Long Term Repo Operations for Small Finance Banks: In order to provide further support to micro, small and other unorganized sector entities, 3-year repo operations of Rs. 10,000 crore at repo rate, for fresh lending up to Rs 10 lakh per borrower; facility is available up to 31 October, 2021.
- Lending by Small Finance Banks (SFBs) to MFIs for on-lending to be classified as priority sector lending: In view of fresh challenges, SFBs are now permitted to regard fresh on-lending to MFIs with asset size up to Rs. 500 crore, as priority sector lending. This facility will be available up to 31 March, 2022.
- Credit flow to MSME Entrepreneurs: To further incentivize inclusion of unbanked MSMEs into banking system, exemption provided in February, 2021 wherein scheduled banks were allowed to deduct credit given to new MSME borrowers from Net Time & Demand Liabilities for calculation of CRR, is now extended to December 31, 2021.