- The funds availed under TLTRO 2.0 can be deployed within 45 days of availment,
against 30 days for TLTRO 1.0
- The TLTRO 2.0 scheme announced by RBI offers an initial sum of Rs 50,000 crores
- Reverse Repo rate reduced from 4.0% to 3.75%
- India is projected to turn around and grow at 7.4% in 2021-22
RBI announces second set of measures on 17th April, 2020 to preserve financial
stability and help put money in the hands of the needy and disadvantaged.
FAQs pertaining to TLTRO 2.0:
- What happens if a bank fails to deploy the funds availed under the TLTRO 2.0
scheme in specified securities within the stipulated timeframe?
Ans: Based on the feedback received from banks and taking into account the
disruptions caused by COVID-19, it has been decided to extend the time available
for deployment of funds under the TLTRO 2.0 scheme from 30 working days to 45
working days from the date of the operation. Funds that are not deployed within
this extended time frame will be charged interest at the prevailing policy repo
rate plus 200 bps for the number of days such funds remain un-deployed. The
incremental interest liability will have to be paid along with regular interest
at the time of maturity.
- Under the TLTRO 2.0 scheme, will the specified eligible instruments have to
be acquired up to fifty per cent from primary market issuances and the remaining
fifty per cent from the secondary market. Is this limit fungible between primary
and secondary market?
Ans: In order to provide banks flexibility in investment, this condition will
not be applicable for funds availed under TLTRO 2.0.
- The Reserve Bank while announcing the fourth TLTRO on April 15, 2020 advised
that the maximum amount that a particular bank can invest in the securities
issued by a particular entity or group of entities out of the allotment received
by it under the TLTRO shall be capped at 10 per cent. Is this condition also
applicable to TLTRO conducted before April 15, 2020? Will this condition apply
for deployment of funds under TLTRO 2.0?
Ans: This condition applies only to the fourth TLTRO conducted on April 17,
2020. It does not apply to the TLTROs conducted before April 17, 2020. It also
does not apply to TLTRO 2.0.
- Will the specified securities acquired from TLTRO funds and kept in HTM
category be included in computation of Adjusted Net Bank Credit (ANBC) for the
purpose of determining priority sector targets/sub-targets?
Ans: In terms of the press release 2237/2019-2020 dated April 17, 2020 (https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=49689)
notifying the TLTRO 2.0 scheme, at least 50 per cent of the total funds
availed under the scheme has to be deployed in specified securities issued
by small NBFCs of asset size of Rs 500 crores and below, mid-sized NBFCs of
asset size between Rs 500 crores and Rs 5000 crores and MFIs.
The objective is to ease any liquidity stress and/or impediments to market
access that these small and mid-sized entities might be facing. In order to
incentivise banks’ investment in the specified securities of these entities, it
has been decided that a bank can exclude the face value of such securities kept
in the HTM category from computation of adjusted non-food bank credit (ANBC) for
the purpose of determining priority sector targets/sub-targets. This exemption
is only applicable to the funds availed under TLTRO 2.0.
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