RBI to conduct first auction under TLTRO 2.0 for Rs 25,000 cr on Apr 23

The Reserve Bank on Friday said it will conduct the first auction under the Targeted Long-Term Repo Operations 2.0 (TLTRO) for an amount of Rs 25,000 crore on April 23.

It is aimed at providing liquidity to small and mid-sized corporates, including non-banking financial companies (NBFCs) and micro finance institutions (MFIs) impacted by COVID-19 disruptions.

The TLTRO 2.0 window of Rs 50,000 crore was announced by RBI Governor Shaktikanta Das earlier in the day.

Available at the policy repo rate for tenors up to three years, the funds availed under this facility would have to be deployed within 30 working days from the date of the operation.

"The funds availed under TLTRO 2.0 shall be deployed in investment grade bonds, commercial paper (CPs) and non-convertible debentures (NCDs) of Non-Banking Financial Companies (NBFCs)," the RBI said in a notification.

Investments made under this facility will be classified as held to maturity (HTM) even in excess of 25 per cent of total investment permitted to be included in the HTM portfolio. Exposures under this facility will not be reckoned under the Large Exposure Framework (LEF), it said.

Of the 50 per cent of the total funds availed, 10 per cent should go for securities issued by micro-finance institutions (MFIs) while 15 per cent towards instrument issued by NBFCs with asset size of Rs 500 crore and below