RBI provides Rs 50,000-crore liquidity for extending Covid-19 loans to healthcare

SS Mallikarjuna Rao, MD and CEO of Punjab National Bank, said on-tap liquidity of Rs 50,000 crore for Covid-related health care sector along with the incentives for banks like priority sector classification and higher interest on surplus liquidity window will ease access to emergency health services.

By Ankur Mishra

The Reserve Bank of India (RBI) on Wednesday announced immediate liquidity of Rs 50,000 crore for banks for enabling them to extend Covid loans to healthcare entities. This liquidity window available at the repo will remain open till March 31, 2022. Under this scheme, banks can provide fresh lending support to vaccine manufacturers, hospitals and also patients for treatment, among others.

Banks are also being incentivised for quick delivery of credit under the scheme through extension of priority sector classification up to March 31, 2022, RBI governor Shaktikanta Das said. The loans will continue to be classified under the priority sector till repayment or maturity, whichever is earlier.

In an interaction with CNBC TV 18, State Bank of India (SBI) chairman Dinesh Kumar Khara said measures will help in creating health infrastructure and will encourage banks to create Covid books. Banks are expected to create a Covid loan book under this scheme. Such banks will be eligible to park their surplus liquidity up to the size of the Covid loan book under the reverse repo window at a rate which is 40 bps higher than the reverse repo rate.

Khara further said two vaccine manufactures have reached out to SBI for loans, and they can be given loans under the new facility.

Bankers also feel that the scheme from the RBI will ease access to emergency health services. CII president Uday Kotak said, “RBI governor has taken the financial sector battle against Covid 2.0 head on with a clear focus on protecting lives and livelihoods.”

SS Mallikarjuna Rao, MD and CEO of Punjab National Bank, said on-tap liquidity of Rs 50,000 crore for Covid-related health care sector along with the incentives for banks like priority sector classification and higher interest on surplus liquidity window will ease access to emergency health services.

Under the scheme, banks can provide fresh lending support to a wide range of entities including vaccine manufactures; importers/suppliers of vaccines and priority medical devices; hospitals/dispensaries; pathology labs; manufactures and suppliers of oxygen and ventilators; importers of vaccines and COVID related drugs; logistics firms and also patients for treatment.

Echoing the views of bankers, Rashmi Saluja, executive chairperson, Religare Enterprises, said: “The central bank has shown lot of foresight by announcing flow of unhindered liquidity to the healthcare sector in order to boost production of vaccine, Covid-related medicines and ramp up oxygen supplies.” This special lending window of Rs 50,000 crore has been classified under priority sector lending and will ensure steady flow of loans to the healthcare sector, she added.