The Reserve Bank of India on 22nd April 2020 has released another set of Frequently Asked Questions on Targeted Long Term Repo Operation in which it has eased some regulatory norms for investments in Targeted Long Term Repo Operation to provide relief to banks investing in papers issued by small and medium sized non-banking finance companies and microfinance institutions under the scheme.
RBI has clarified that the banks shall have to maintain amount of specified securities for the amount received in TLTRO in its HTM book at all times till maturity of TLTRO.
RBI has decided to allow up to 30 working days for deployment in specified securities for those banks who have availed funds under the first tranche of TLTRO conducted on March 27, 2020
Under the TLTRO 2.0 scheme, banks have to invest at least 50% of the total funds in bonds issued by small NBFCs of asset size of Rs 500 crore and below, mid-sized NBFCs of asset size between Rs 500 crore and Rs 5,000 crore and MFIs.
RBI clarifies that the 10 % cap stipulated for banks to invest in a particular company or a group of companies applies only to the fourth round of the targeted long term repo operation (TLTRO).
Click here to read the Notification.
