At a time when 6 states contribute to most Covid 19 cases and the threat continues unabated, the RBI has come forth and extended relief for the various stakeholders. Here are the key takeaways from the ShaktiKanta Das unscheduled announcement made today:
1. For the health care:
As the health care system that is working relentlessly on a war footing needs to be strengthened in such trying times, the RBI has offered an on tap window of Rs. 50000 crore and this is a lending facility which will be extended to various health care entities.
2. Restructuring of loan:
For borrowers who had not availed of earlier restructuring facilities with loan exposure amounting to Rs. 25 crore and loan being standard as on March 31, 2021, they are allowed to get their loans restructured amid the second Covid 19 wave. The restructured proposed under the scheme can be invoked or availed up to September 30, 2021.
The moratorium under restructuring 1.0 can now be extended up to 2 years.
For those who had availed of restructuring earlier and the resolution allowed a moratorium of less than 2 years, financial entities based on their discretion and borrowers' standinf can modify such plan to extend the period of moratorium and/ or extending the residual tenor up to a total of 2 years. Other conditions will remain the same.
So, based on the loan principal amount outstandinf one can defer the unpaid principal to the tenure end. Now amid disruption which has been posed yet again due to Covid 19, borrowers will be better off reaching out to banks and asking for restructuring of loan citing the RBI's restructuring 2.0 circular.
3. Relief extended to small businesses and MSMEs:
Lenders can review the working capital limits of small businesses and MSMEs as a one time measure. Those who availed earlier window of restructuring can be given additional two years of moratorium, he said.
4. Limited KYC use proposed until December 1, 2021:
In respect of the extant KYC rules, simplification of rules has been allowed as following :
(a) extending the scope of video KYC known as V-CIP (video-based customer identification process) for new categories of customers such as proprietorship firms, authorised signatories and beneficial owners of Legal Entities and for periodic updation of KYC;
(b) conversion of limited KYC accounts opened on the basis of Aadhaar e-KYC authentication in non-face-to-face mode to fully KYC-compliant accounts;
(c) enabling the use of KYC Identifier of Centralised KYC Registry (CKYCR) for V-CIP and submission of electronic documents (including identity documents issued through DigiLocker) as identify proof; (d) introduction of more customer-friendly options, including the use of digital channels for the purpose of periodic updation of KYC details of customers.
Also, in view the COVID related restrictions in various parts of the country, Regulated Entities are being advised that for the customer accounts where periodic KYC updating is due/pending, no punitive restriction on operations of customer account(s) shall be imposed till December 31, 2021 unless warranted due to any other reason or under instructions of any regulator/enforcement agency/court of law, etc. Account holders are requested to update their KYC during this period.
5. Ease in rules for availing overdraft facility for state governments up to September 30, 2021:
To enable the State Governments to better manage their fiscal situation in terms of their cash-flows and market borrowings, certain relaxations are being permitted with regard to availment of Overdraft (OD) facilities. Accordingly, the maximum number of days of OD in a quarter is being increased from 36 to 50 days and the number of consecutive days of OD from 14 to 21 days. This facility will be available up to September 30, 2021. The Ways and Means Advance (WMA) limits of states have already been enhanced on April 23, 2021.
22. The relevant circulars/notifications relating to all the announcements will be issued separately, starting today