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RBI's COVID infra boost: Industry experts assess the impact

Updated : May 07, 2021 14:10:41 IST

The Reserve Bank of India (RBI) Governor on Wednesday classified COVID-critical manufacturing and services as a priority sector and offered banks incentives to extend easy credit.

The RBI announced a Rs 50,000 crore special liquidity window to ease access to emergency health services for COVID. Banks can borrow cheap funds through this facility to lend to various healthcare stakeholders including hospitals, pathology labs, vaccine manufacturers and oxygen suppliers.

CNBC-TV18 spoke to Ameera Shah, Promoter & MD, Metropolis; A Velumani, CMD & CEO, Thyrocare Technologies; and Sunil Khurana, MD & CEO, BPL Medical Technology which could be potential beneficiaries of this.

Welcoming the RBI announcement, Khurana said that they will avail the priority sector loan. “This is a very welcome move. We have not availed but we are just waiting for the notifications to hit the bank. My team is very excited and we are going to definitely work on it,” he said.

He also said that they have been selected for production-linked incentive (PLI) scheme for 2 COVID-related products and the priority sector loan will provide a further boost to the company.

According to Velumani, the majority of the listed companies in the diagnostic space have enough liquidity. However, he believes that RBIs measures will help diagnostic labs which are looking to put up extra capacity.

“Listed companies have to put money in fixed deposits if excess in hand. So, the majority of the listed companies in the diagnostic space have liquidity enough and that is not the true limitation. However, having said that, it will be very useful for those who want to put up extra infrastructure either for treatments, for even putting up RT-PCR labs, or for creating solutions which will help in treating COVID patients,” he said.

He also said that Thyrocare is looking to ramp up capacity, but the company has enough cash so will not be keen on borrowing.

Shah said that it is important to invest in healthcare capacity and it is good to see that healthcare is getting priority. However, she believes that it would have been much better if the priority lending was provided for healthcare in general and not only COVID.

“It is a good thing that healthcare is at least getting prioritized as a sector for lending. This is specifically for COVID, but I think it would have been an even better move if this was in general for healthcare,” she said.

She also expects larger firms to undertake capacity expansion, as she believes that smaller companies can ramp up only when they have some visibility of testing needs.

“It is very difficult for the private sector, especially for the smaller companies to borrow money, build capacity and wait for a surge to happen. Without that futuristic mathematical modelling of potentially what could happen, it is not very likely that the private sector is just going to go and expand capacity. This probably will happen by the larger firms who have the ability and the balance sheet to do that,” she said.

For the full discussion, watch the video.
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