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RBI to conduct 5th LTRO for Rs 25,000 cr on March 18

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Press Trust of India Mumbai

The Reserve Bank on Monday announced it will conduct the fifth tranche of the long-term repo operations (LTROs) for Rs 25,000 crore on March 18, in its bid to secure adequate liquidity to the troubled financial markets.

The central bank has already conducted four such operations of Rs 25,000 crore each since February 14 with huge success as the issue has been overbought multiple times.

"On a review of current financial conditions and with a view to further improving monetary transmission, it has been decided to conduct additional long-term repo operations (LTROs) for up to a total amount of Rs 1,00,000 crore at the policy repo rate.

 

"Accordingly, it has been decided to conduct an LTRO for Rs 25,000 crore on March 18," the RBI said in a note, adding the issue will have a three-year tenor.

The regulator also said based on further review of evolving liquidity conditions, more LTROs will be announced separately.

Before the first LTRO was announced at the February 6 monetary policy review, the longest tenor of a repo operation was 14 days while the vast majority of repos are sold overnight.

Meanwhile, the central bank also announced the details of the second dollar-rupee swap for USD 2 billion on March 23.

Taking into consideration the requirement of US dollars in the market, it has been decided to undertake another 6-month dollar sell/buy swap auction to provide liquidity to the forex market for USD 2 billion.

The first such swap was conducted today for USD 2 billion and both the measures are to shore up liquidity which even though is huge surplus to the tune of Rs 3 lakh on a daily basis.

Both these measures were announced by RBI governor Shaktikanta Das at a hurriedly called presser at 4 pm where the market was expecting a rate cut, given the way other central banks have reacted to the crisis in the global financial system due to the Covid-19 pandemic.

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First Published: Mar 16 2020 | 9:26 PM IST

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