On-tap liquidity facility: RBI asks banks to on-lend to healthcare cos in 30 days of availing credit

The RBI on Friday asked the banks seeking funding from the special Rs 50,000-crore on-tap liquidity window to on-lend money to the healthcare service providers within 30 days of availing the credit facility. Earlier this week, the RBI had decided to open an on-tap liquidity window of Rs 50,000 crore with tenures of up to three years at the repo rate till March 31, 2022, to boost liquidity for ramping up COVID-19-related healthcare infrastructure and services.

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 and dispensaries; and pathology labs and diagnostic centres.

They will also provide finance to manufacturers and suppliers of oxygen and ventilators; importers of vaccines and COVID-related drugs; COVID-related logistics firms; and also patients for treatment.

The RBI said requests from banks desirous of availing funds from the central bank will be subject to availability of funds as on the date of application. Funds cannot be guaranteed in case the total amount of Rs 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,” it said in a statement adding that there is no tenure restriction regarding lending by banks under the scheme.

However, the banks will have to ensure that the amount borrowed from the RBI should at all times be backed by lending to the specified segments till maturity of the scheme.

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 can deliver these loans to borrowers directly or through intermediary financial entities regulated by the RBI.

“Under the scheme, banks are expected to create a COVID-19 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-19 loan book with the RBI under the reverse repo window at a rate which is 25 bps lower than the repo rate,” the RBI said.

Banks that want to deploy their own resources without availing funds from the RBI under the scheme for lending to the specified segments will also be eligible for the incentives.