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Lenders to create Covid loan book – RBI incentivizes




“In order to mitigate the adverse impact of the second wave of the pandemic on certain contact-intensive sectors, a separate liquidity window of Rs 15,000 crore is being opened till March 31, 2022, with tenors of up to three years at the repo rate,” said governor Shaktikanta Das.

The Reserve Bank of India (RBI) on Friday announced a special liquidity window of Rs 15,000 crore for lenders to incentivize them to create a ‘Covid loan book’ by lending to contact-intensive sectors and MSMEs including hotels, tourism, aviation, etc. which have been adversely impacted.

The main highlights are:

  1. Lenders to create Covid Loan Book by increasing credit flow to contact intensive sectors like hotels, tourism, aviation, restaurants,  aviation ancillary services, private bus operators, and car repair services, among others.
  2. Further, banks will be eligible to park their surplus liquidity up to the size of the Covid loan book at 40 basis points (bps) higher than the reverse repo rate. Currently, the repo rate stands at 4% and the reverse repo rate at 3.35% after the regulator kept rates unchanged on Friday. 
  3. The scheme is over and above the liquidity window of Rs 50,000 crore for ramping up Covid-related healthcare infrastructure and services.

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