RBI to inject Rs1,00,000-cr liquidity into financial markets
17 March 2020
Reserve Bank of India (RI) on Monday announced additional Long Term Repo Operations (LTROs) for up to a total of Rs1,00,000 crore at the policy repo rate, with a view to further improving monetary transmission amidst the COVID-19 crisis.
Accordingly, RBI will conduct the first tranche of the 3-year LTRO for Rs25,000 crore on 18 March 2020.
Based on further review of evolving liquidity conditions, RBI will decide on additional tranches of the LTROs separately.
RBI said the operational guidelines for LTROs issued by LTRO on 7 February and clarifications issued in this regard on 13 February will apply for the current LTRO as well.
RBI has also decided to undertake another 6-month dollar/rupee sell/buy swap auction on 23 March to provide liquidity to the foreign exchange market.
The auction will be multiple price based, ie, successful bids will be accepted at their respective quoted premiums.
RBI, meanwhile, announced revised prudential exposure limits for primary urban cooperative banks (UCBs) for a single borrower/ and a group of connected borrowers t 15 per cent and 25 per cent, respectively, of their tier-I capital from up to 15 per cent and 40 per cent of their capital funds.
The revised exposure limits shall apply to all types of fresh exposures taken by UCBs. UCBs shall bring down their existing exposures which are in excess of the revised limits to within the aforesaid revised limits by 31 March 2023. However, where the existing exposure comprises only term loans and non-fund-based facilities, while no further exposure shall be taken on such borrowers, these facilities may be allowed to continue as per their respective repayment schedule / till maturity.