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Long Term Repo Operation (LTRO)
April 13 , 2020
1741 days
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- The Reserve Bank of India (RBI) has said it has received Rs 1.13 lakh crore worth of bids in the targeted long term repo operation (LTRO).
- The LTRO is a tool under which the central bank provides one-year to three-year money to banks at the prevailing repo rate, accepting government securities with matching or higher tenure as the collateral.
- While the RBI’s current windows of liquidity adjustment facility (LAF) and marginal standing facility (MSF) offer banks money for their immediate needs ranging from 1-28 days, the LTRO supplies them with liquidity for their 1- to 3-year needs.
- LTRO operations are intended to prevent short-term interest rates in the market from drifting a long way away from the policy rate, which is the repo rate.
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