The RBI announced, last October, an ‘On Tap TLTRO’ scheme worth Rs 1 trillion, to provide liquidity support to various economic sectors and banks.
The Reserve Bank of India (RBI) has extended the deadline for the TLTRO on-tap scheme by six months. The RBI governor Shaktikanta Das on Wednesday announced the extension of the deadline from March 31 to September 30 after holding the Monetary Policy Committee (MPC) of the Reserve Bank.
In his speech, the governor added that the central bank will provide liquidity support of Rs 50,000 crore for fresh lending this year through NABARD (Rs 25000 crore), SIDBI (Rs 15000 crore) and NHB (Rs 10000 crore).
The RBI announced, last October, an ‘On Tap TLTRO’ scheme worth Rs 1 trillion, to provide liquidity support to various economic sectors and banks. The scheme was aimed mainly at key sectors such as construction, realty and microfinance.
Targeted Long Term Repo Operations (TLTROs) has for long been used as a tool for enhancing the liquidity within the system, particularly the corporate bond market.
The Long Term Repo Operations (LTRO) enables banks to borrow one to three-year funds from the central bank at the repo rate, by providing government securities with similar or higher tenure as collateral.T he scheme benefits banks to get funds for a longer duration.
However, in the case of TLTRO, the central bank requires lenders who benefitted from the scheme to invest that fund only in investment-grade corporate debt.
The extension of the scheme's deadline comes as the economy is facing the resurgence of the COVID-19 pandemic that has forced many states to re-impose curfews and lockdowns.
Earlier, the RBI Monetary Policy Committee (MPC) kept the repo rate unchanged at 4 percent for the financial year 2021-22. The reverse repo rate has been maintained at 3.35 percent.