InvestorQ : What is the Long Term Repo Options (LTRO) that RBI initiated as part of its credit policy announcement?
Deepa Salunkhe made post

What is the Long Term Repo Options (LTRO) that RBI initiated as part of its credit policy announcement?

Answer
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Juvina Maggie answered.
7 months ago


In its policy, the RBI announced its decision to conduct new one-year and three-year repos worth Rs.1 lakh crore. This move is likely to ensure better monetary policy transmission by enabling banks to reduce lending rates. Experts opine that this also help the RBI in controlling inflationary expectations and providing support to growth. With inflation making rate cuts difficult, RBI’s focus will be on ensuring monetary policy transmission to the actual borrowers. RBI also underlined in its policy that the current slowdown was driven by liquidity issues, slow credit off-take, and weak rural demand. With the added threat of the global slowdown due to the Chinese pandemic, the RBI needs to think beyond rates to solve the macroeconomic problems. From February 15 onward, RBI will conduct term repos of one-year and three-year tenors of appropriate sizes for up to a total amount of ₹1,00,000 crore at the policy repo rate.