18) Targeted Longterm Repo Operation (TLTRO) Flashcards
1
Q
What is TLTRO ?
A
It is a tool that lets banks borrow 1 to 3yr funds from the central bank at the repo rate by providing
G-securities with similar or higher tenure as collateral
2
Q
How does it help ?
A
It helps banks get funds for a longer duration as compared to short term(upto 28days) liquidity provided by RBI through other tools such as LAF and MSF
3
Q
Describe the overall flow ?
A
1) TLTROs provide banks with access to cheaper capital from RBI
2) It encourages them to lend more and spur economic activity
3) They can also invest these long term funds in assets that yield better returns to improve profitability
4
Q
What condition has RBI put ?
A
It told banks that out of these funds, small and medium sized funds and MFI’s should receive atleast 50% of these funds
