The loan recast of up to two years will be available to individuals and small and medium enterprises that did not restructure their loans in 2020 and were classified as standard accounts till March 2021, RBI Governor Shaktikanta Das said.
This facility will be available to borrowers with a total exposure of Rs 25 crore.
He said RBI will give Rs 50,000 crore of liquidity support to banks for providing fresh lending to a wide range of entities including vaccine manufacturers, importers/suppliers of vaccines and priority medical devices, among others.
These loans of up to three years tenor will be obtainable at repo rate and will be available till March 31, 2022.
He also announced a calendar for bond-buying.
Just as the economy appeared to be inching back to normalcy, India was hit by a second wave of infections in early April, prompting states and cities to restrict public movements and impose lockdowns, which have hit some businesses hard. India added 3,82,315 virus cases over the last 24 hours to reach a total of 2.06 crore, while death toll rose by a record 3,780 to 226,188, health ministry data showed.
RBI has been meeting with bankers and shadow lenders (NBFCs) in recent weeks to discuss the economic situation, possible stress to balance sheets and credit flow in the system.
Bankers had reportedly asked the RBI for a three-month moratorium, particularly for retail and small borrowers.
S&P Global Ratings on Wednesday slashed India's GDP growth forecast for the current financial year (April 2021 to March 2022) to 9.8 per cent saying the second COVID wave may derail a budding recovery in the economy and credit conditions. It had previously predicted a 11 per cent GDP growth for FY22.
RBI will buy Rs 35,000 crore of bonds under Government Securities Acquisition Programme (G-SAP) -- India's version of quantitative easing -- on May 20. It has also allowed banks to dip into their floating provisions to set aside money for bad loans. Das said the central bank sees outlook 'highly uncertain' and clouded with downside risks, but doesn't see a major change to inflation forecast.
''As the financial year 2020-21 (April 2020 to March 2021) - the year of the pandemic - was drawing to a close, the Indian economy was advantageously poised, relative to peers. India was at the foothills of a strong recovery, having regained positive growth, but more importantly, having flattened the infection curve. In a few weeks since then, the situation has altered drastically,'' he said.
''As in the recent past, the RBI will continue to monitor the emerging situation and deploy all resources and instruments...'' CII president Uday Kotak said the central bank has ''taken the financial sector battle against COVID 2.0 head on with a clear focus on protecting lives and livelihoods.'' Further, Moody's Investors Service said, ''In response to the worsening situation in India, the RBI has allowed for a one-time restructuring of loans to individuals and small businesses up to a loan size of Rs 25 crore. “This measure is much milder than the blanket loan moratorium given last year and the proportion of restructured loans will be lower. Nevertheless, the need for this measure highlights the reemergence of downside risks to banks' asset quality.'' On the economic outlook, RBI governor said the global economy is exhibiting incipient signs of recovery but activity remains uneven across countries and sectors.
In India, the record foodgrains production and buffer stocks in 2020-21 provide food security and support to other sectors of the economy in the form of rural demand, employment and agricultural inputs and supplies, including for exports. But aggregate demand conditions, particularly in contact-intensive services, are likely to see a temporary dip.
A normal south-west monsoon, as forecast by the IMD should help to contain food price pressures, especially in cereals and pulses, he said adding the inflation trajectory over the rest of the year will be shaped by the COVID-19 infections and the impact of localised containment measures on supply chains and logistics.
Das said, under the Rs 50,000 crore term liquidity facility, banks are expected to create a COVID loan book under the scheme.
RBI will also conduct special three-year long-term repo operations of Rs 10,000 crore at repo rate for small finance banks which will be deployed for fresh lending of up to Rs 10 lakh per borrower. This facility will be available till October 31, 2021.
Das also announced rationalisation of certain components of the extant KYC norms including extending the scope of video KYC for new categories of customers.
Other measures included relaxation in overdraft facility for state governments.
''The second wave, though debilitating, is not unsurmountable,'' Das said. ''At the RBI, we stand in battle readiness to ensure that financial conditions remain congenial and markets continue to work efficiently. We will work in close coordination with the government to ameliorate the extreme travails that our citizens are undergoing in this hour of distress.