The Reserve Bank of India on 13th February has listed frequently-asked questions on the Long Term Repo Operations (LTRO) – Operational guidelines, giving clarifications about the LTRO facility. Details regarding interest, collateral and margin requirements of LTRO has been provided by RBI.
The interest payment on LTROs will have to be made on the maturity of the LTROs i.e on the reversal date and the interest will be calculated on a fixed-rate basis and the rate will remain fixed for the tenor of the operation. The interest will be compounded on an annual basis.
The participants shall furnish securities as collateral for the complete tenor of LTRO and the residual maturity of the securities offered as collateral should be equal or more than the tenor of the LTRO at inception, further, the securities offered as collateral can be substituted as many times as they wish to in terms of extant guidelines.
The current margin requirements under LAF as per extant guidelines will be applicable for LTROs as well and also the collateral offered under LTROs will be subjected to variation margin. The securities offered as collateral for LTROs will be marked to market on a quarterly basis, on the basis of latest prices published by Financial Benchmarks India Pvt Ltd.
Click here to read the Notification.
