The central bank of India has already pledged to keep monetary policy loose though its room to act has been constrained by inflation concerns
In a bid to provide liquidity support and strengthen public in general in their fight against Covid-19 pandemic, the Reserve Bank of India (RBI) Governor Shaktikanta Das today announced 'on tap liquidity' to the public in general. The loan will be available at the RBI's Repo Rate, i.e. 4 per cent. The tenor of the loan will be up to 3 years and on tap loan will be available till 31st March 2022.
"To boost provision of immediate liquidity for ramping up COVID related healthcare infrastructure and services in the country, an on-tap liquidity window of ₹50,000 crore with tenors of up to three years at the repo rate is being opened till March 31, 2022," RBI Governor Shaktikanta Das said.
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.
The RBI Governor made the announcement while delivering his virtual speech. He said that the global economic outlook is uncertain but the Covid-19 impact on the national inflation is comparatively lower than the first wave. Shaktikanta Das also said that India's manufacturing sector is one of the least affected sectors and expected fast recovery in the national economy once the pandemic stablises.
Before this address, Governor Shaktikanta Das reportedly met with bankers and shadow lenders and discussed current economic situation, potential stress to balance sheets, credit flows and liquidity.
The RBI has augmented fiscal support measures from Modi Government with loan holidays and cash infusion by cutting interest rates. The Central Bank of India has pledged to keep monetary policy loose though its room to act has been constrained by inflation concerns.
The Covid-19 wave has severely hit India in the recent weeks and the Modi Government is taking all measures to stop the deadly virus from worsening further. Pressure from industry groups has begun mounting on Prime Minister Narendra Modi to impose lockdowns to stem its spread, a move he has so far resisted to avoid the economic damage suffered last year.