MFIN may pool securities to access funds for small MFIs under TLTRO 2.0

Credit enhancement would entail guarantee from bigger institutions in case of defaults up to a certain percentage

Small- and medium-sized microfinance institutions (MFIs) are planning to pool securities, with enhancement facility from external institutions, to avail credit from financial institutions under the targeted long-term repo operations (TLTRO 2.0).
 

Last week, the Reserve Bank of India (RBI) announced a TLTRO of Rs 50,000 crore to provide liquidity support to the shadow banking sector and MFIs. According to the RBI, the funds availed under TLTRO shall be deployed in investment-grade instruments.
 

However, a majority of small MFIs don’t have investment-grade rating. “We are thinking of pooling bonds of small and mid-sized MFIs, with some sort of credit enhancement facility,