Indian hospitality industry gets respite with RBI’s special liquidity window

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The apex bank of India, Reserve Bank of India (RBI) has announced the extension of INR 15,000 crore liquidity window to support contact intensive businesses such as restaurants, travel agencies, hotels and aviation ancillary services that are bearing the brunt of the pandemic.

In a bid to support revival of sectors hit most by the COVID-19 pandemic, the Reserve Bank of India (RBI) announced a separate on-tap liquidity window of INR 15,000 crore with a tenor of 3 years at the repo rate till March 31, 2022 to provide liquidity support to the contact-intensive sectors like restaurants, hotels and those involved in the tourism sector, among others. Under the scheme, banks are expected to create a separate COVID loan book.

Indian hospitality industry gets respite with RBI's special liquidity window
The RBI Governor – Shaktikanta Das

“In order to mitigate the adverse impact of the second COVID-19 wave on contact intensive sectors, a separate liquidity window of INR 15,000 crore is being opened till March 31, 2022, with tenors of up to 3 years at the repo rate,” Shaktikanta Das, Governor, Reserve Bank of India (RBI), said.

Under the scheme, banks can provide fresh lending support to hotels, restaurants, tourism and travel operators, adventure and heritage facilities, aviation ancillary services (ground handling and supply chains) and other services that include private bus operators, car repair services, rent a car services providers, event/conference organisers, spa clinics and beauty parlours and saloons. These sectors have seen the biggest impact due to the second wave as authorities started imposing lockdown measures to curb the spread of the virus.

These sectors will be permitted to park their surplus liquidity, equivalent to the size of the loan book created by them under this scheme, under the reverse repo window at a rate which is 25 basis points (bps) lower the repo rate, or 40 bps higher than the reverse repo rate.

“By way of an incentive, banks will be permitted to park their surplus liquidity up to the size of the loan book created under this scheme with the Reserve Bank under the reverse repo window at a rate which is 25 bps lower than the repo rate or, termed in a different way, 40 bps higher than the reverse repo rate,” Das said.


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