In a bid to provide more liquidity in the system, the Reserve Bank of India (RBI) on Friday notified that it has decided to cover 26 stressed sectors under the targeted long-term repo operations (TLTRO) scheme. The scheme has now been extended to 26 stressed industries, in addition to the five sectors announced earlier, recognised by the KV Kamath-led committee for loan relief, the apex bank said.
The central bank had brought five sectors under the on-tap TLTRO scheme, in synergy with the credit guarantee available under the Emergency Credit Line Guarantee Scheme (ECLGS 2.0), on October 21.
"The stipulation under ECLGS 2.0 that only entities with outstanding between Rs 50 crore and Rs 500 crore shall be eligible for the credit guarantee shall, however, not apply to funds availed under on-tap TLTRO," the RBI said.
All other terms and conditions of the scheme remain the same, it added.
The central bank has directed banks to synergise the two schemes by availing funds from the RBI under on-tap TLTRO scheme and seek guarantee under ECLGS 2.0 to provide credit support to stressed sectors. Under TLTRO, banks can invest in corporate bonds, commercial papers (CPs), and non-convertible debentures (NCDs) issued by the entities in specific sectors.
In order to channel liquidity to small and mid-sized corporates, including NBFCs and micro finance institutions (MFIs), that have been impacted by COVID-19 disruptions, the RBI has announced the on-tap TLTRO scheme on October 9, 2020, which will be available up to March 31, 2021. The central bank will conduct on-tap TLTRO with tenors of up to three years for a total amount of up to Rs 1 lakh crore at a floating rate linked to the policy repo rate with flexibility to enhance the amount and period after a review of the response to the scheme.
As part of Atma Nirbhar Bharat Package 3.0 announced on November 12, 2020, the central government launched ECLGS 2.0 under which the corpus of Rs 3 lakh crore of existing ECLGS 1.0 was extended to provide 100 per cent guaranteed collateral free additional credit to entities in 26 stressed sectors identified by the Kamath Committee of RBI, plus healthcare sector, with credit outstanding of above Rs 50 crore and up to Rs 500 crore as on February 29, 2020.