RBI announces Rs 1 lakh crore ‘on tap’ TLTRO

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RBI announces Rs 1 lakh crore ‘on faucet’ Targeted Long-Term Repo Operations

The Reserve Bank on Wednesday introduced an ‘on faucet’ Targeted Long-Term Repo Operations (TLTRO) scheme of as much as Rs 1 lakh crore to allow banks to supply liquidity assist to a number of sectors, together with agriculture, retail, medicine and prescribed drugs and MSMEs.

“Investments made by banks under this facility 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. All exposures under this facility will also be exempted from reckoning under the large exposure framework (LEF),” the RBI mentioned.

Securities acquired by the banks with the intention to carry them as much as maturity are categorised beneath ‘held to maturity (HTM)’.

RBI in its Statement of Developmental and Regulatory Policies, which was issued with the bi-monthly financial coverage evaluate on October 9, introduced that it could conduct on faucet TLTRO of as much as three years tenor for a complete quantity of as much as Rs 1 lakh crore at a floating rate linked to the coverage repo rate.

All banks eligible beneath the Liquidity Adjustment Facility (LAF) can take part within the scheme.

Liquidity availed by banks beneath the scheme needs to be deployed in company bonds, industrial paper and non-convertible debentures issued by entities in sectors like agriculture; agri-infrastructure; secured retail; MSMEs; and medicines, prescribed drugs and healthcare — over and above the excellent stage of their investments in such devices as on September 30, 2020.

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