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Bank of Baroda sanctions Rs 500 cr to Serum Institute under RBI's Rs 50,000 cr liquidity facility

RBI Governor Shaktikanta Das announced had a Rs 50,000 lending programme to ramp up COVID-19-related healthcare infrastructure amid massive second wave ravaging India

twitter-logoBusinessToday.In | May 6, 2021 | Updated 13:48 IST
Bank of Baroda sanctions Rs 500 cr to Serum Institute under RBI's Rs 50,000 cr liquidity facility
Banks can provide fresh lending support to a wide range of entities, including vaccine makers and even Covid patients

Bank of Baroda has been the first public sector bank to sanction Rs 500 crore to vaccine maker Serum Institute of India (SII) after the Reserve Bank of India (RBI) on Wednesday opened a Rs 50,000 crore liquidity facility for emergency healthcare. SII is making Covishield vaccine, which is one of the three vaccines approved in India against coronavirus.

India's biggest state-owned bank State Bank of India (SBI) has also sanctioned a credit line to homegrown Bharat Biotech but the amount disbursed to the pharma company is not in public domain, Business Standard reported, citing top bank officials. "Bank of Baroda has sanctioned Rs 500 crore to Serum Institute today," an official familiar with the developments told the daily.

Also read: RBI's direct support to healthcare sector will generate total output demand of Rs 80,000 crore: SBI Research

RBI Governor Shaktikanta Das, in his unscheduled address on Wednesday, announced a Rs 50,000 lending programme, to ramp up COVID-19-related healthcare infrastructure amid the massive second wave ravaging India. Under this liquidity facility, banks will be able to lend to companies in the healthcare sector that'll help them increase capacity as demand rises after the Centre allowed vaccination for all above the age of 18.

Under the facility, the RBI will provide funds to banks for three years at repo rate of 4 per cent. "Under the scheme, banks can provide fresh lending support to a wide range of entities, including vaccine manufacturers; importers/suppliers of vaccines and priority medical devices; hospitals/dispensaries; pathology labs; manufactures and suppliers of oxygen and ventilators; importers of vaccines and COVID related drugs; logistics firms and also patients for treatment," Das said.

Banks will now be able to lend to COVID-19 patients, who need money for treatment. This lending will get "priority sector classification" till repayment or maturity, he said. The window for such loans will remain open till March 31, 2022.

Das said banks would create a COVID-19 loan book under the scheme. They'll be incentivised for quick delivery of loans under the scheme. Banks will be able to park their surplus liquidity up to the size of Covid-19 loan book with the RBI under the reverse repo window, which will be 40 bps higher than the reverse repo rate.

Also read: Big boost for vaccine producers, pharma players! RBI unleashes Rs 50,000 cr liquidity for emergency healthcare

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