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Measures for Stakeholders to Tackle Second Wave of Pandemic-RBI

Published on May 06, 2021
Current Context: The Reserve Bank of India (RBI) has released a set of measures and strategies with an aim to grant support to the stakeholders in the second wave of the pandemic.
Measures for Stakeholders to Tackle Second Wave of Pandemic-RBI
  • The RBI announced Rs 50,000 crore as an on-tap liquidity window with a maturity of 3 years and at a repo rate till 31st March 2022. This is granted under the priority sector lending facility.
  • The banks can lend this amount for the purpose of vaccine manufacturing, COVID-19 related drugs, oxygen supply and ventilators etc.
  • The banks are supposed to create a COVID-19 loan book, where the banks will have an option to mention an equivalent amount as lend to borrowers, with RBI at reverse repo rate plus 40 basis points.
  • This means that if banks lend Rs 50,000 crore to the borrowers and the equivalent amount of Rs 50,000 crore of surplus funds of the system is put in the reverse repo with RBI, they will earn 3.75% instead of 3.35%.
  • RBI has allowed Small Finance Banks (SFBs) lending to Micro Finance Institutions (MFI) for on-lending to individuals under PSL classification, for this the MFIs are supposed to have an asset size of Rs 500 crore. This facility will be active till 31st March 2022.
  • RBI will also support small businesses, MSMEs and the unorganised sector during the second wave of pandemic and in this regards, the RBI has introduced special three year long term repo operations worth Rs 10,000 crore at repo rate for SFBs. Thus SFBs can lend upto Rs 10 lakhs to each borrower till 31st Oct 2021.
  • RBI also announced a second G-sec purchase under G-SAP 1.0 for Rs 35,000 crore on 20th May 2021.
  • Static Part: 
    • HQ of RBI: Mumbai
    • Governor of RBI: Shaktikanta Das
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