Relief measures announced by Reserve Bank of India on 27 March 2020 & 17 April 2020:
- Reduction of policy repo rate by 75 basis points (from current 5.15% to 4.40%)
- RBI will conduct auctions of TLTRO (Targeted Long Term Repo Operations) of up to three-year tenor of appropriate sizes for a total amount up to INR 2 lakh crore (~USD 26 billion) at a floating rate, linked to policy repo rate (50% corporates, 25% for development institutions for onward lending to agri, housing and medium / small enterprises and 25% for NBFCs and MFI)
- CRR of all banks to be reduced by 100 basis points to 3% beginning March 28, for 1 year. This will release liquidity of INR 1,37,000 crore across the banking system
MSF raised from 2% of SLR to 3% with immediate effect. Applicable up to June 30, 2020.
- Liquidity coverage ratio for banks reduced from 100% to 80% likely to release liquidity
- These liquidity measures will inject liquidity of INR 4.74 lakh crore (~USD 63 billion) to the system.
Relief for MSMEs
- INR3 Lakh crore (USD 39 bn) collateral free loan with 100% credit guarantee
- INR20k crore (USD 2.6 bn) subordinate debt for stressed MSMEs
- INR50k crore (USD 6.5 bn) equity infusion for MSMEs with growth potential and viability through Fund of Funds
- New definition of MSMEs – investment limit revised upwards; additional criteria of turnover introduced
- No global tenders for government contracts up to INR200 crore (USD 26 mn)
- E-market linkage to be promoted as replacement of trade fairs and exhibitions
- MSME dues to be cleared within 45 days
Relief for NBFCs
- INR30k crore (USD 3.9 bn) liquidity infusion for NBFCs/HFCs/MFIs
- INR45k crore (USD 5.9 bn) partial credit guarantee scheme for NBFCs
Relief for Power utilities
- INR90k crore (USD 11.7 bn) liquidity infusion to DISCOMs against receivables guaranteed by State government for exclusive purpose of discharging liabilities to power generating firms
- All lending institutions are being permitted to allow a moratorium of three months on repayment of installments for term loans outstanding as on March 1, 2020
- Lending institutions permitted to allow deferment of 3 months on payment of interest w.r.t all such working capital facilities o/s as of March 1, 2020
- Moratorium period to be excluded while computing 90 Day NPA norm for asset downgrade.
- Time period allowed under RBI framework for resolution extended by 90 days (210 + 90 days)
- Further deferring implementation of last tranche of 0.625 % of capital conservation buffer to Sept. 30, 2020
Real estate sector and EPC/Contractors:
- Extension of up to 6 months to be provided by all Central Agencies (like Railways, Ministry of Road, Transport & Highways, Central Public Works Dept, etc.)
- Government agencies to partially release guarantees, to the extent contracts are partially completed
- Registration and completion timelines extended by upto six months for all registered real estate projects
- Concurrent extension of various statutory compliances under RERA
Insolvency and Bankruptcy Code (IBC):
- Threshold of default under section 4 of the IBC has been increased from Rs 100,000 to Rs 10 million with the intention to prevent triggering of insolvency proceedings against MSMEs.
- Fresh admission of Insolvency cases for default arising after 25 march 2020 under IBC, 2016 suspended for six month (extendable by another six month) in an effort to stop companies at large from being forced into insolvency proceedings in such force majeure causes of default.
- Loans for COVID-19 excluded from definition of default
- Government to proposed new guidelines for MSME