Relief Measures announced by RBI for Vaccine Manufacturers, Healthcare Sector, Individual Borrowing and Small Businesses

On Wednesday, in response to the second wave of a covid-19 pandemic, the RBI announced relief measures taken for vaccine manufacturers, the healthcare sector, individual borrowing, and small businesses.

Shaktikanta Das, the Governor of RBI also delivered an optimistic note on the Indian economy and said that the impact of second-wave would be minimal with limited hit on aggregated demand and consumption. He also mentioned RBI remains “proactive” and will take the required steps in response to the situation.

As per the RBI following are the different measures are taken for different borrowers.

For Vaccine Manufacturers and Hospitals  

The RBI has announced an on-tap liquidity window of up to Rs. 50,000 crore for a loan to the healthcare industry by banks, a window will be open till 31 March 2022.

Banks can utilize these funds from the RBI at the repo rate in order to give loans to companies and individuals operating in the healthcare industry. These include vaccine makers, pathology labs, suppliers and importers of vaccine and priority medical devices, hospitals and dispensaries, suppliers and manufacturers of ventilators and oxygen, logistic firms, and also patients for treatment.

These steps will help Indian vaccine manufacturers like Bharat Biotech, SII to expand their production capacity in order to rapidly vaccinate India and the world. It will also help firm like Dr. Reddy’s who will import or manufacture vaccines like Sputnik V

In addition to this, it will also help pathological labs to expand their capacity and purchase necessary medical devices to ramp up their capacity and infrastructure.

Also, the firms involved in supplying and manufacturing oxygen-related equipment and ventilators, logistic firms can also avail of this scheme. The loans under this scheme could be up to a three years period.

Lending to these industries will come under priority sector lending up to 31 March 2022. Banks have also given permission to lend to non-banking finance companies, which will further lend to the approved firms.

For Small Businesses

RBI Governor addressed small businesses and MSMEs, along with the individuals as the most exposed categories amid the Covid’s deadliest second wave.

The RBI also extended incentives for banks to give loans to MSMEs by allowing exposures to be deducted from the banks’ liabilities for calculation of maintaining the cash reserve ratio (CRR). This could push the banks to continue to provide loans to MSMEs, which are expected to be the worst hit by the pandemic’s second wave.

The companies that were in good shape previously and are now struggling or feeling the impact of the pandemic can also avail of the scheme up to 30 September as per the RBI. However, the RBI has set the eligibility criteria for such firms, their aggregate loan exposure to all banks has to be less than 25 crores.

Further, the banks have been given the approval to reassess the working capital requirement and review the working capital sanctioned limits for the small firms.

For Individuals  

Individual borrowers have also been considered under the loan restructuring scheme announced for MSMEs. Up to Rs. 25 crore will be available for individual loan account either for fresh loan restructuring or for revision of earlier restructuring proposal shared with the banks.

Also, an individual affected by Covid-19 can lend money for treatment from banks under the Rs. 50,000 crore window declared by RBI.

Banks have also been instructed to not take any strict actions over the pending KYC of individuals till 31 December 2021. Moreover, digital KYC service has also been extended to more categories of customers by the RBI.

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