Mumbai: In a bid to ease the liquidity strain that might be caused due to the coronavirus outbreak and its subsequent economic fallout, the Reserve Bank of India on Monday decided to conduct more long term repo operations (LTROs).
The Reserve Bank has already conducted LTROs on February 17 and 24 and March 1, and 9, 2020. The LTROs are conducted for a three-year tenor period.
Addressing media persons here, RBI Governor Shaktikanta Das said that that fresh LTROs will be conducted via which Rs 1 lakh crore will be injected through multiple tranches.
In financial parlance, an LTRO is a loan scheme for banks which come at the current repo rate from the RBI.
This type of operation are generally conducted to relieve the banks from some of their debt repayment obligations towards bondholders. Thus, it boosts cash flows emanating from the banking sector.
It was highly speculated that the RBI will ease key lending rate soon after with the US FED and BoE cut rates to aide the industry.
However, market watchers said that such a move will have a more durable impact on dealing with the economic fallout of coronavirus.
On the chances of a rate cut, the Governor said that any decision on the same will be taken only by the monetary policy committee (MPC) after assessing the impact of coronavirus on the economy.