India’s Reserve Bank has unveiled measures to help lenders cope with soaring bad loans and is also providing relief to inpiduals by including one-off debt restructuring to obtain loans amid surging coronavirus cases.
Reserve Bank of India Governor Shaktikanta Das said in a speech that the moratorium will be available to inpiduals and small and medium-sized enterprises (SMEs) that have not restructured their loans in 2020 and have set standard accounts through March 2021.
"Small companies and financial entities at the grassroots level bear the greatest brunt of the second wave of infections," Das said, announcing several measures to boost liquidity and boost lending to various sectors in need.
Das said the new round of the moratorium would be applicable to borrowers with a maximum aggregate risk of 250 million rupees ($3.39 million).
The Reserve Bank of India (RBI) also announced a special liquidity window of 500 billion rupees for banks to lend to the healthcare sector in periods of up to three years at the repurchase rate and it will be available until March 31, 2022.
The RBI said banks would need to maintain a record of COVID loans under the scheme and would also receive a return 40 basis points higher on the reverse repurchase rate on excess funds, to the extent of loans being disbursed. The RBI also announced a 3-year private long-term buyback of 100 billion rupees to Small Finance Banks (SFB).
RBI has also relaxed overdraft guidelines for state governments and said that banks can leverage their cyclical reserves that they hold as of December 31, 2020 to make provisions for non-performing assets with prior approval of the board of directors.
In 2020, the bank announced a delay of a total of six months for all borrowers.
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