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RBI stipulation on deployment of funds may affect bidding under TLTRO 2.0, say Ind-Ra

RBI stipulation on deployment of funds may affect bidding under TLTRO 2.0, say Ind-Ra

Bidding by banks at the first auction under the Targeted Long-Term Repo Operation (TLTRO) 2.0 on April 23 for Rs. 25,000 crore may not be encouraging due to the stipulation on the deployment of funds, according to India Ratings (Ind-Ra).

Given that non-banking finance companies (NBFCs), especially those not rated at the highest end of credit rating, were not able to access the funding from banks under the TLTRO (1.0) facility (announced on March 27, 2020), the RBI announced TLTRO 2.0 on April 17.

TLTRO 2.0 is aimed at channelling liquidity to small and mid-sized corporates, including NBFCs and micro-finance institutions (MFIs), that have been impacted by Covid-19 disruptions.

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