RBI also gave NBFCs flexibility for an 'asset classification standstill' period from March 1, 2020 to May 31, 2020 for all their borrowers who have availed the three-month repayment moratorium announced earlier.
The measures are aimed at providing relief to NBFCs that have been facing challenges due to COVID-19 related disruptions.
"It has been decided to conduct targeted long-term repo operations (TLTRO 2.0) for an aggregate amount of Rs 50,000 crore, to begin with, in tranches of appropriate sizes," Governor Shaktikanta Das said while addressing media through video conferencing.
RBI said the funds availed by banks under TLTRO 2.0 should be invested in investment grade bonds, commercial paper, and non-convertible debentures of NBFCs, with at least 50 per cent of the total amount availed going to small and mid-sized NBFCs and microfinance institutions (MFIs).
These investments have to be made within one month of the availment of liquidity from the RBI and it will be classified as held to maturity (HTM) even in excess of 25 per cent of total investment permitted to be included in the HTM portfolio, Das said.
Also, exposures under this facility will also not be reckoned under the large exposure framework.
RBI said in respect to accounts for which lending institutions have decided to grant moratorium or deferment, and which were standard as on March 1, 2020, the 90-day NPA norm shall exclude the moratorium period, that is there would an asset classification standstill for all such accounts from March 1, 2020 to May 31, 2020.
"NBFCs have flexibility under the prescribed accounting standards to consider such relief to their borrowers," the Governor said.
The central bank also decided to provide special refinance facilities for a total amount of Rs 50,000 crore to Nabard, Sidbi and NHB to enable them to meet sectoral credit needs.
"This will comprise Rs 25,000 crore to Nabard for refinancing regional rural banks (RRBs), cooperative banks and micro finance institutions (MFIs); Rs 15,000 crore to Sidbi for on-lending/refinancing; and Rs 10,000 crore to NHB for supporting housing finance companies (HFCs)," Das said.
These institutions, known as All India Financial Institutions (AIFIs), play an important role in meeting the long-term funding requirements of agriculture and the rural sector, small industries, housing finance companies, NBFCs and MFIs.
RBI also extended the resolution plan period for NBFCs by 90 days from the current 210 days.
Under RBI's prudential framework of resolution of stressed assets dated June 7, 2019, in the case of large accounts under default, banks, non-deposit taking systemically important NBFCs and deposit taking NBFCs are currently required to hold an additional provision of 20 per cent if a resolution plan has not been implemented within 210 days from the date of such default.
"Recognizing the challenges to resolution of stressed assets in the current volatile environment, it has been decided that the period for resolution plan shall be extended by 90 days," Das said.
The central bank also allowed NBFC players to extend the date for commencement for commercial operations (DCCO) for loans given commercial real estate by additional one year without considering it as restructuring.
Currently, RBI permits banks to extend the DCCO in respect of loans to commercial real estate projects delayed for reasons beyond the control of promoters by an additional one year, over and above the one-year extension permitted in normal course, without treating the same as restructuring.
"The move will provide relief to NBFCs as well as the real estate sector," he said. HV ABMABM