RBI Long-Term Repo – “The RBI shall conduct term repos of one-year and three-year tenors of appropriate sizes for up to a total amount of Rs 1 lakh crore at the policy repo rate,” the RBI said. As such these operations will be conducted at the prevailing repo rate of 5.15 percent.
The Reserve Bank of India has decided to introduce long-term repo operations into its liquidity toolkit— a measure that market participants expect will bring down short term rates sharply and also prompt increased investment in corporate bonds.
These LTROs, together with the RBI’s earlier introduced ‘Operation Twist’, are an attempt by the central bank to manage bond yields and push transmission of already announced interest rate cuts.
In its statement on developmental and regulatory policies, the RBI said it has decided to conduct LTROs starting the fortnight beginning Feb.15, 2020.
