RBI on Wednesday announced relief for individuals and businesses who have loans up to Rs 25 crores. It has allowed them to seek a loan restructuring if they have been affected in the second wave of the pandemic.
RBI Announces Relief to Borrowers
The RBI is providing aid to individuals and business owners in these critical situations. It is allowing a loan restructuring to them. Titled ‘Framework 2.0’, the relief is for those who have loans up to Rs. 25 crores. RBI Governor Shaktikanta Das addressed that the COVID-19 pandemic has devasted the economy. Small borrower individuals and businesses have been impacted the most. New uncertainties are arising at local and regional level economies.
Further relief has already been offered to borrowers whose accounts have been reconstructed by August 6, 2020. It has been extended by two years. Some people are wondering whether two years is enough for the worst-hit sectors to get back on their feet. The moratorium period of small and micro retailers has also been increased. Shaktikanta also mentioned that the Central Bank was willing to take some more conventional measures. Home loans and other personal loans will also receive a recast.
The Priority Sector
In its Rs. 50,000 crores scheme, RBI allows banks to lend to those involved in the Covid war. Vaccine manufacturers, vaccine suppliers, essential medicine suppliers and manufacturers, oxygen and ventilator suppliers, logistic firms, etc. will be included. Besides this, the banks are being incentivized. This is being done for the quick delivery of credit through the priority sector. Moreover, these loans will be classified under the priority sector until maturity. The impact on corporate balance sheets would be known only if the situation persisted. In the present scenario, corporations could manage without relief.
RBI Regulates Policy During the Second Wave
SBI Chairman, Dinesh Khara mentioned that the second wave’s impact is different from last year’s Covid scenario. Cash flow was completely disrupted during lockdown last year. The RBI has continued to regulate its policy during the pandemic. Additionally, the series of relief announce a novel approach. MD and CEO of Punjab National Bank said that the measures are really helpful. It addressed the qualms faced by the vulnerable sections. RBI is optimistic about India’s flexibility and post-pandemic future. It is doing its best in helping the borrowers. However, analysts have described the latest measures as moderate as compared to last year’s moratorium.