Money & Banking

25,000-cr LTRO: Reserve Bank gets ₹1.71-lakh-cr bids

Our Bureau Mumbai | Updated on March 02, 2020



The banking sector’s appetite for long-term funds via the Reserve Bank of India’s long-term repo operation (LTRO) continues to be robust. This is underscored by the fact that at the third LTRO conducted on Monday to provide banks with three-year funds, the RBI received 66 bids aggregating 6.9 times the notified amount of ₹25,000 crore.

In absolute terms, the total bids that were received amounted to ₹1,71,965 crore. The amount allotted was ₹25,028 crore. The RBI will be conducting one more LTRO, also of three years tenor, on March 9.

The LTROs are being conducted by the RBI to inject durable liquidity into the banking system and ensure transmission of monetary policy changes. Under LTRO, banks get funds at the repo rate, which is currently at 5.15 per cent.

In its ‘Statement on Developmental and Regulatory Policies’, issued on February 6, the RBI said it will conduct term repos of one-year and three-year tenors of appropriate sizes for up to a total amount of ₹1-lakh crore at the policy repo rate.

The two LTROs that were conducted in February got a thumping response from banks. In the first LTRO of three-year tenor, conducted on February 17, banks placed bids for almost eight times the notified amount of ₹25,000 crore. In the second LTRO of one-year tenor, conducted on February 24, banks placed bids for almost five times the notified amount of ₹25,000 crore.

Published on March 02, 2020

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