As announced on May 05, 2021 in the Statement by Shri Shaktikanta Das, Governor, Reserve Bank of India (RBI), it has been decided to open an on-tap liquidity window of ₹50,000 crore with tenors of up to three years at the repo rate till March 31, 2022 to boost provision of immediate liquidity for ramping up COVID-related healthcare infrastructure and services in the country. Under the scheme, banks can provide fresh lending support to a wide range of entities including vaccine manufacturers; importers/suppliers of vaccine and priority medical devices; hospitals/dispensaries; pathology labs and diagnostic centres; manufacturers and suppliers of oxygen and ventilators; importers of vaccines and COVID-related drugs; COVID-related logistics firms and also patients for treatment.

2. Banks are being incentivised for quick delivery of credit under the scheme through extension of priority sector lending (PSL) classification to such lending up to March 31, 2022. These loans will continue to be classified under PSL till repayment/maturity, whichever is earlier. Banks may deliver these loans to borrowers directly or through intermediary financial entities regulated by the RBI.

3. Under the scheme, banks are expected to create a COVID loan book. By way of an additional incentive, such banks will be eligible to park their surplus liquidity up to the size of the COVID loan book with the RBI under the reverse repo window at a rate which is 25 bps lower than the repo rate.

4. Banks desirous of deploying their own resources without availing funds from the RBI under the scheme for lending to the specified segments mentioned above will also be eligible for the incentives stipulated in para 2 and 3 above.

5. The operational details of the scheme are given in Annex-1.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/177

Annex-1

The operational details of the On-Tap Term Liquidity Facility to Ease Access to Emergency Health Services scheme are as under:

(a) The scheme will remain operational from May 07, 2021 till March 31, 2022.

(b) All banks eligible under the Liquidity Adjustment Facility (LAF) can participate in the Scheme. Requests from banks desirous of availing funds from the RBI will be subject to availability of funds as on the date of application, i.e., funds cannot be guaranteed in case the total amount of ₹50,000 crore is already availed. Furthermore, banks should endeavour to lend within a reasonable period, i.e., not later than 30 days from the date of availing the funds from the RBI. There is no tenor restriction regarding lending by banks under the scheme. However, the banks will have to ensure that the amount borrowed from RBI should at all times be backed by lending to the specified segments till maturity of the scheme.

(c) The Scheme will be operationalised on tap. Banks can place requests for funds in the format enclosed in Annex-2, through e-mail. The Reserve Bank will aggregate all such requests received and release funds every Monday (on the subsequent working day if Monday is a holiday) by initiating a 3-year repo contract with the requesting bank.

(d) If a bank places multiple requests during the week, all such requests will be aggregated, and a single repo contract will be created on the date of operation.

(e) In case the requested amount exceeds the remaining amount under the scheme on the date of operation, the remaining amount will be distributed on pro-rata basis among all the eligible requests.

(f) The Reserve Bank reserves the right to decide the quantum of allotment and /or accept/reject any or all the requests, either wholly/partially, without assigning any reason thereof.

(g) The eligible collateral and margin requirements will remain the same as applicable for LAF operations. The requesting bank must ensure that sufficient amount of securities is available in its Repo constituent account on the date of operation. All other terms and conditions as applicable to LAF operations, including facility for security substitution, will also be made applicable to the scheme, mutatis mutandis.

(h) Banks can park their surplus liquidity up to the size of the COVID loan book in a special 14-day reverse repo window to be conducted on each reporting Friday between 11:30 AM and 12 noon. The first such operation will be held on May 21, 2021. These 14-day reverse repo operations would continue till March 31, 2022 and will be reviewed thereafter. Banks are required to ensure scrupulous compliance with the above conditions prior to parking of funds in the special 14-day reverse repo window.

(i) Banks desirous of deploying their own resources without availing funds from the RBI under the scheme will also be eligible for the facilities stipulated in para (h) above. Banks deploying their own resources for lending to the specified segments are required to keep the Financial Markets Operations Department informed by e-mail about any changes in the COVID loan book during the previous week on every Monday till closure of the scheme.

(j) The amount utilised under the Scheme will be informed to market participants in the Money Market Operations (MMO) press release.

(k) All queries/clarifications regarding operational aspects of the facility may be directed to the Financial Markets Operations Department through e-mail and/or telephone (022-22630982). All technical issues may be directed to the e-Kuber Helpdesk through email with a copy to laffmd@rbi.org.in and/or telephone (022-27595662/67/022-27595591 /92/93/94).