The Reserve Bank of India vide its notification dated 5th February 2021 has decided to permit banks to provide funds under the on Tap TLTRO scheme to Non-Banking Financial Companies (NBFCs).
The on-tap TLTRO scheme includes Rs 1-lakh-crore worth funds with a tenor of three years at a floating rate linked to the policy repo rate and the inclusion of NBFCs under on-tap TLTROs is likely to improve the credit flow to the NBFC sector in near term.
The previous iterations of the TLTRO scheme used banks as intermediaries to supply liquidity to various sectors, including stressed NBFCs and microfinance institutions. Now, the inclusion of NBFCs as intermediaries to provide funds to specific sectors will aid in wider distribution.
