RBI Policy: To extend TLTRO on-tap scheme by 6 months till Sep 30

Informist, Wednesday, Apr 7, 2021


MUMBAI – The Reserve Bank of India has decided to extend the on-tap targeted long-term repo operations scheme by six months till Sep 30, the central bank said in the Statement on Developmental and Regulatory Policies released today.


The RBI had announced the scheme in October to increase the focus of liquidity measures in specific sectors that have backward and forward linkages and multiplier effects on growth. The scheme aimed to encourage banks to extend credit to stressed sectors amid COVID-19. 


On Oct 21, the RBI allowed banks to lend to five stressed sectors under the scheme–agriculture, agri infrastructure, secured retail, micro, small and medium enterprises, and drugs, pharmaceuticals and healthcare.


Later, on Dec 4, it also included the 26 stressed sectors identified by K.V. Kamath committee on debt restructuring.


Liquidity availed by banks under the scheme needs to be deployed in corporate bonds, commercial paper and non-convertible debentures or can be extended as loans to these sectors.


In February, the central bank allowed banks to provide funds availed under the on-tap scheme to non-banking financial companies for incremental lending to specific stressed sectors.


Investments made by banks under this facility is classified as held-to-maturity even in excess of 25% of total investment permitted in the said portfolio. 


All exposures are also exempted from being reckoned under the large exposure framework.  End


Reported by Bhakti Tambe

Edited by Nidhi Chugh



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