RBI Announces Regulatory Changes to Ease Impact of COVID-19 Pandemic
RBI published a statement that sets out policy measures for banks, including certain regulatory changes arising from the COVID-19 relaxations. The statement highlights that to aid in the recovery process amid the COVID-19 pandemic, RBI decided to defer implementation of the last tranche of the capital conservation buffer (CCB) of 0.625%, from April 01, 2021 to October 01, 2021. Additionally, RBI decided to defer the implementation of Net Stable Funding Ratio (NSFR) from April 01, 2021 to October 01, 2021. Other key policy measures covered in this statement relate to the inclusion of non-banking financial companies (NBFCs) under the Targeted Long-Term Repo Operations (TLTRO) on Tap Scheme, extension of marginal standing facility relaxation, increase in limits under the statutory liquidity ratio (SLR) holdings in held-to-maturity category, and provision of credit to micro, small, and medium enterprise (MSME) entrepreneurs.
The following are the highlights of the key announced measures:
- Inclusion of NBFCs under TLTRO on Tap Scheme—Banks under the TLTRO on Tap scheme will provide funds to NBFCs for incremental lending to these sectors. RBI, in October 2020, had announced the TLTRO on Tap Scheme, which is available up to March 31, 2021.
- Extension of marginal standing facility relaxation—On March 27, 2020, RBI allowed banks to avail funds under the marginal standing facility by dipping into the SLR by up to an additional 1% of the net demand and time liabilities—that is, cumulatively up to 3% of net demand and time liabilities. To providing comfort to banks on their liquidity requirements, a decision has been made to continue with the marginal standing facility relaxation for an additional six months—that is, up to September 30, 2021.
- Increase in limits under SLR holdings in held-to-maturity category—On September 01, 2020, RBI increased the limits under held-to-maturity category from 19.5% to 22% of net demand and time liabilities in respect of SLR-eligible securities acquired on or after September 01, 2020, up to March 31, 2021. It has now been decided to extend the dispensation of enhanced held-to-maturity limit of 22% up to March 31, 2023, to include securities acquired between April 01, 2021 and March 31, 2022. The held-to-maturity limits would be restored from 22% to 19.5% in a phased manner, starting from the quarter ending June 30, 2023. It is expected that banks will be able to plan their investments in SLR securities in an optimal manner, with a clear path for restoration of held-to-maturity limits.
- Provision of credit to MSME entrepreneurs—To incentivize new credit flow to the MSME borrowers, scheduled commercial banks will be allowed to deduct credit disbursed to "new MSME borrowers" from their net demand and time liabilities for the calculation of cash reserve ratio. For the purpose of this exemption, "new MSME borrowers" shall be defined as those MSME borrowers that have not availed any credit facilities from the banking system, as on January 01, 2021.
Keywords: Asia Pacific, India, Banking, COVID-19, Credit Risk, TLTRO, Basel, Regulatory Capital, NSFR, Capital Conservation Buffer, SME, SLR, Held to Maturity, Liquidity Risk, RBI
Featured Experts

María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer

Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.

Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Related Articles
APRA Publishes Results of Climate Risk Self-Assessment Survey
The Australian Prudential Regulation Authority (APRA) has published the findings of its latest climate risk self-assessment survey conducted across the banking, insurance, and superannuation industries.
ACPR Publishes Updates Related to CRD IV and Covered Bonds
The French Prudential Supervisory Authority (ACPR) published a notice related to the methods for calculating and publishing prudential ratios under the Capital Requirements Directive (CRD IV) and the minimum requirement for own funds and eligible liabilities (MREL).
BIS Paper Contributes to Debate on Regulating NBFIs and Big Techs
The Financial Stability Institute (FSI) of the Bank for International Settlements recently published a paper proposing a framework for classifying financial stability regulation as either entity-based or activity-based.
EIOPA Publishes Guidance on Climate Change Scenarios in ORSA
The European Insurance and Occupational Pension Authority (EIOPA) published the risk dashboard based on Solvency II data and the final version of the application guidance on climate change materiality assessments and climate change scenarios in the Own Risk and Solvency Assessment (ORSA).
EBA and ECB Respond to Proposals on Sustainability Disclosures
The European Banking Authority (EBA) and the European Central Bank (ECB) published their responses to the consultations of the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG) on sustainability-related disclosure standards.
BIS Report Notes Existing Gaps in Climate Risk Data at Central Banks
A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.
EBA Publishes Multiple Regulatory Updates for Regulated Entities
The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.
EIOPA Issues SII Taxonomy and Guide on Sustainability Preferences
The European Insurance and Occupational Pensions Authority (EIOPA) published Version 2.8.0 of the Solvency II data point model (DPM) and XBRL taxonomy.
EESC Opines on Proposals on CRR and European Single Access Point
The European Union published, in the Official Journal of the European Union, an opinion from the European Economic and Social Committee (EESC); the opinion is on the proposal for a regulation to amend the Capital Requirements Regulation (CRR).
HM Treasury Publishes Multiple Regulatory Updates in July 2022
HM Treasury published a draft statutory instrument titled “The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022,” along with the related explanatory memorandum and impact assessment.