RBI to conduct long-term repo operations on Feb 17, 24 for ₹50,000 crore1 min read . Updated: 09 Feb 2020, 07:01 AM IST
- The details of remaining LTROs will be announced in due course, the RBI said further
- The RBI move is aimed at providing cheaper money to banks at the repo rate and, thus, improve liquidity in the banking system
MUMBAI : The Reserve Bank of India (RBI) will begin the first tranche of its long-term repo operations on February 17 with three-year repo of ₹25,000 crore, followed by another on February 24 for an equal amount.
The operations date is announced a day after the RBI's monetary policy wherein it said long-term repos aggregating up to ₹1 lakh crore will be conducted in tranches from mid-February to ease liquidity in the system.
The RBI move is aimed at providing cheaper money to banks at the repo rate and, thus, improve liquidity in the banking system.
Currently, the repo operations are of short-term, usually of overnight, wherein banks can borrow money from the RBI at the prevailing repo rate.
As announced in the statement on 'Developmental and Regulatory Policies' on February 6, 2020, it has been decided to conduct Long Term Repo Operations (LTROs) for one-year and three-year tenors for up to a total amount of ₹1 lakh crore at the policy repo rate, the RBI said in a release on Friday
In this connection, the 3-year repo operations for an amount of ₹25,000 crore will be conducted on February 17. While the 1-year repo operation will be conducted for the same amount on February 24, RBI said.
The details of remaining LTROs will be announced in due course, the RBI said further.
These LTROs will be in addition to the existing liquidity adjustment facility (LAF) and marginal standing facility (MSF) operations, the RBI said adding that the total amount of liquidity injected through these operations would be up to ₹1 lakh crore.
LTROs will be conducted on the CBS (E-KUBER) platform. The operations would be conducted at a fixed rate, the RBI said.
Banks would be required to place their requests for the amount sought under LTRO during the window timing at the prevailing policy repo rate. Bids below or above policy rate will be rejected, it added. "In case of over-subscription of the notified amount, the allotment will be done on a pro-rata basis. RBI will, however, reserve the right to inject marginally higher amount than the notified amount due to rounding effects."
The minimum bid amount would be ₹1 crore and multiples thereof. There will be no restriction on the maximum amount of bidding by individual bidders.