Despite easy policy, not many takers for RBI's on-tap TLTRO schemes

The central bank may persist with its easy monetary policy, but there appears to be not many takers for its long-term funding proposals. Banks have returned nearly Rs. 1.61 lakh crore availed through the two dedicated windows opened last year – Long Term Repo (LTRO) and Targeted LTRO.

Banks that had availed funds under those plans, introduced since April-March last year in different phases, were allowed to reverse these transactions before maturity and avail new funds at the prevailing lower repo rate.

About Rs 1,23,572 crore and Rs 37,348 crore were repaid by banks under the LTRO and TLTRO schemes, respectively, according to the central bank’s annual report.

Focusing on the revival of activity through liquidity injection, on tap TLTROs with tenors of up to three years for a total amount of up to Rs 1 lakh crore were introduced in October 2020. The facility was made available up to March 31 this year, and further extended up to September 30.

Effective December 4, 2020, it was decided to expand on tap TLTROs to other stressed sectors in synergy with the credit guarantee available under the Emergency Credit Line Guarantee Scheme (ECLGS 2.0) of the government.

With effect from February 5 this year, banks were permitted to provide funds under the on tap TLTRO scheme to Non-Banking Financial Companies (NBFCs) for incremental lending to specified stressed sectors.

Even the central bank took steps to ease liquidity pressure arising out of advance tax payment, an event that sucked out cash from the system.

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Two 56-day term repo auctions for a total amount of Rs 1.0 lakh crore were conducted at the existing repo rate mid-September, involving total liquidity injection to the tune of Rs 1,000 crore, RBI said.



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