There is no over-arching moratorium granted – that’s the bottomline. But the RBI in this unscheduled speech has given a restructuring benefit to the borrower and not the lender; those under the maximum stress have been taken care of. Those who had taken the moratorium benefit last year can now extend it further and those who had not taken it earlier and are now under stress can also now get a moratorium benefit.

And it’s a good thing that its not a carte blanche moratorium, which otherwise would have put the banking sector under a lot of stress. The RBI has taken, albeit small steps to ensure there is en**ough liquidity in the market with the borrowers as well as the lenders.

The Governor once again has reassured the markets that it is there to take proactive steps, trying to infuse some sense of optimism in these dark times. The market seems to be relatively happy with these measures announced today as the market, which was meandering around 150 points in the green, rose by over 300 points post the speech. Just like the RBI, the market is being cautious, not knowing what lay ahead and what more measures might be required in the future.

Thus its an evolving sitaution with great uncertainity ahead; for the time being, this it the best which the Governor could have done.

Highlights of the speech:

*On-tap liquidity window of Rs 50,000 crore with tenure of up to 3 years at repo rate being opened till March 31st 2022 – to support entities including vaccine manufacturers, medical facilities, hospitals and also patients. To be treated as ‘priority sector’ till repayment or maturity.

*Second purchase of government securities of Rs 35,000 crore under G-SAP 1.0 to be conducted on May 20

*Targeted long-term repo operation for small finance banks of up to Rs 10,000 crore – funds to be used for lending of up to Rs 10 lakh per borrower

*Small finance banks allowed to on-lend to smaller microfinance institutions of asset size up to Rs 500 crore

*Banks will be incentivized for quick lending under priority sector lending.

*Individuals, MSMEs permitted one-time restructuring till September 30, 2021.

*Those who have availed earlier window of restructuring can be given additional 2 years of moratorium

*Permits limited KYC to be used till December 1, 2021

*States to remain in overdraft for a maximum of 50 days compared to 36 days earlier and number of consecutive overdraft days increased from 14 days to 21 days.