RBI announces measures to support export import; gives greater flexibility to SIDBI
Mumbai, May 22 (KNN) The Reserve Bank of India's Governor Shaktikanta Das today said the measures being announced today can be broadly delineated under four categories- measures to improve the functioning of markets and market participants; measures to support exports and imports; efforts to further ease financial stress caused by COVID-19 disruptions by providing relief on debt servicing and improving access to working capital; and steps to ease financial constraints faced by state governments.
He was giving his Statement on Developmental and Regulatory Policies.
Elaborating the measures, he said the RBI had earlier announced a special refinance facility of Rs 15,000 crore to Small Industries Development Bank of India (SIDBI) at RBI's policy repo rate for a period of 90 days for on-lending/refinancing.
In order to provide greater flexibility to SIDBI, RBI has decided to roll over the facility at the end of the 90th day for another period of 90 days.
The Governor said that the Voluntary Retention Route (VRR) scheme has evinced strong investor participation, with investments exceeding 90 per cent of the limits allotted under the scheme.
In view of difficulties expressed by FPIs and their custodians on account of COVID-19 related disruptions in adhering to the condition that at least 75 per cent of allotted limits be invested within three months, RBI has decided that an additional three months time will be allowed to FPIs to fulfil this requirement.
On measures to Support Exports and Imports, the central bank chief said in order to alleviate genuine difficulties being faced by exporters in their production and realisation cycles, it has been decided to increase the maximum permissible period of pre-shipment and post-shipment export credit sanctioned by banks fr0m the existing one year to 15 months, for disbursements made up to July 31, 2020.
Also, in order to enable EXIM bank to meet its foreign currency resource requirements, RBI has been decided to extend a line of credit of Rs 15,000 crore to the EXIM Bank for a period of 90 days (with rollover up to one year) so as to enable it to avail a US dollar swap facility.
Meanwhile, on extension of Time for Payment for Imports, Das said with a view to providing greater flexibility to importers in managing their operating cycles in a COVID-19 environment, it has been decided to extend the time period for completion of outward remittances against normal imports (i.e. excluding import of gold/diamonds and precious stones/jewellery) into India fr0m six months to twelve months fr0m the date of shipment for such imports made on or before July 31, 2020.
On measures to Ease Financial Stress, the RBI Governor said the central bank had earlier, on two separate occasions (March 27 and April 17, 2020), announced certain regulatory measures pertaining to (a) granting of 3 months moratorium on term loan installments; (b) deferment of interest for 3 months on working capital facilities; (c) easing of working capital financing requirements by reducing margins or reassessment of working capital cycle; (d) exemption fr0m being classified as 'defaulter' in supervisory reporting and reporting to credit information companies; (e) extension of resolution timelines for stressed assets; and (f) asset classification standstill by excluding the moratorium period of 3 months, etc. by lending institutions.
In view of the extension of the lockdown and continuing disruptions on account of COVID-19, the above measures are being extended by another three months fr0m June 1, 2020 till August 31, 2020 taking the total period of applicability of the measures to six months (i.e. fr0m March 1, 2020 to August 31, 2020), said the Governor.
The lending institutions have been permitted to restore the margins for working capital to their original levels by March 31, 2021. Similarly, the measures pertaining to reassessment of working capital cycle are being extended up to March 31, 2021.
Additionally, RBI has also decided to permit lending institutions to convert the accumulated interest on working capital facilities over the total deferment period of 6 months (i.e. March 1, 2020 up to August 31, 2020) into a funded interest term loan which shall be fully repaid during the course of the current financial year, ending March 31, 2021.
In view of the current difficulty in raising resources fr0m capital markets, the group exposure limit of banks has been increased fr0m 25 per cent to 30 per cent of eligible capital base, for enabling corporates to meet their funding requirements fr0m banks. The increased limit will be applicable up to June 30, 2021. (KNN Bureau)