Banks secure a bit more than TLTRO 2.0


The non-banking financial companies and micro-financial institutions borrowed a little more than half of what was offered to them by the RBI. The RBI under its new policy of TLTRO or targeted long-term repo operation window, had offered about rupees 25000 crore to these financial institutions.

The non-banking financial companies (NBFC)s and micro-financial institutions (MFI)s bided for and borrowed about rupees 12,850 crores from the 25000 crores offered by the RBI. This offer was made by the RBI at the prevailing repo rate, which is 4.4%. which means even at a low repo rate the biding ratio or the ratio between bids received and notified amount is 0.5.

This was the second edition of TLTRO. The first one had a bulk amount of one trillion and had seen a more enthusiastic response than he second time. But the difference is that the first TLTRO had allowed the institutions to invest the money in commercial papers, non convertible debentures and corporate bonds. The conditions of the second window are quite different, the instiytutions have to invest atleast 10% in micro financial institutions, 15% in bonds of non banking financial institutions with a smaller asset size of less than rupees 500 crores and another 25% in bonds of non-banking financial companies of asset size less than rupees 5000 crores and less than 500 crores. The banks can invest these funds in the respective areas within 15 days from auction.

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