Context:

The Reserve Bank of India (RBI) will conduct on-tap targeted long-term repo operations (TLTRO) for an amount of Rs.1 lakh crore to ensure comfortable liquidity conditions in the system.

TLTRO or LTRO

• LTRO: The LTRO is a tool under which the central bank provides 1 year to 3 year money to banks at the prevailing reporate, accepting government securities with matching or higher tenure as the collateral.
• TLTRO: Targeted Long-Term Repo Operations (TLTRO), banks can invest in specifi c sectors through debt instruments (corporate bonds, commercial papers, and non-convertible debentures (NCDs)) to push the credit fl ow in the economy.
  • It is called ‘Targeted’ LTRO as in this case, the central bank wants banks opting for funds under this option to be specifically invested in investment-grade corporate debt.
  • This helps banks get funds for a longer duration as compared to the short-term (up to 28 days) liquidity provided by the RBI through other tools such as liquidity adjustment facility (LAF) and marginal standing facility (MSF).