RBI extends the On Tap Special Long-Term Repo Operations facility for banks till 31st December 2021.

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The Reserve Bank of India on 11th October 2021 has extended the on Tap Special Long-Term Repo Operations (SLTRO) facility till 31st December 2021 for small finance banks. This will enable the financial institutions to provide credit support to micro, small and medium enterprises, which would insulate them from the impact of Coronavirus pandemic.

All Small Finance Banks (SFBs) eligible under the Liquidity Adjustment Facility (LAF) can participate in the Scheme. There is no tenor restriction regarding lending by SFBs under the scheme. However, the SFBs will have to ensure that the amount borrowed from the RBI should at all times be backed by lending to the specified segments till maturity of the SLTRO. Furthermore, SFBs should endeavour to lend within a reasonable period, i.e., not later than 30 days from the date of availing the funds from RBI.

SFBs can place requests for funds in the specified format, through e-mail. The Reserve Bank will aggregate all such requests received and release funds every Monday  by initiating a 3-year repo contract at repo rate with the requesting bank. Requests from SFBs desirous of availing funds from the RBI will be subject to availability of funds as on the date of application, i.e., funds cannot be guaranteed in case the total amount of ₹10,000 crore is already availed.

The eligible collateral and margin requirements will remain the same as applicable for LAF operations. The requesting bank must ensure that sufficient amount of securities is available in its Repo constituent account on the date of operation. All other terms and conditions as applicable to LAF operations, including facility for security substitution, will also be made applicable to the scheme, mutatis mutandis.

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