RBI extends deployment time limit to 45 days from 30 under TLTRO 2.0

The will now get 45 days to deploy money drawn under Targeted Long term Repo Operations 2.0 (TLTRO 2.0) as against the previous limit of 30 days.

The extension has been granted based on the feedback received from and taking into account the disruptions caused by Covid-19, said in a statement.

Funds that are not deployed within this extended time frame will be charged interest at the prevailing policy repo rate plus 200 bps for the number of days they remain un-deployed. The incremental interest liability will have to be paid along with regular interest at the time of maturity.

On April 17, 2020, the said it will conduct auctions under TLTRO 2.0 for companies and microfinance institutions impacted by Covid-19 disruptions at the policy repo rate for tenors up to three years. The total amount that could be drawn, under this window would be up to Rs 50,000 crore to begin with. governor Shaktikanta Das indicated that the amount could be revised based on emerging scenarios.

The funds availed by under TLTRO 2.0 should be invested in investment-grade bonds, commercial paper, and non-convertible debentures of NBFCs. At least 50 per cent of the total amount availed should go to small and mid-sized NBFCs and MFIs, RBI had said.

About 10 per cent of the money in availed under TLTRO 2.0 should be invested in securities and instruments issued by Micro Institutions (MFIs). Another 15 per cent in securities/instruments issued by NBFCs with asset size of Rs 500 crore and below and 25 per cent in securities/instruments issued by NBFCs with assets size between Rs 500 crore and Rs 5,000 crore.

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