LTRO - Long Term Repo Operations

Описание: Indian economy has been facing a slow down during the recent times. LTRO, Long-term repo operations, is a new tool announced by the Reserve Bank of India to stimulate the Indian economy. RBI, the central Bank of India, announced the measures on 6th February, 2020. Through LTRO route, infusion of Rupees one lakh crore into the Indian banking system is envisaged.
Liquidity Adjustment Facility or LAF and Marginal Standing Facility or MSF are the two existing liquidity tools and both take care of short term requirements, ranging between 1 and 28 days. LTRO is long term in nature and supplies liquidity to the banking system for their 1 to 3 year needs.
Banks borrow from RBI at a rate known as Repo Rate. Since January 2019, the repo rate has been cut substantially. However, the reduction is yet to reflect in the lending rate. . LTRO being low-cost, will force banks to bring down interest rates on loans. This may, in turn, lead to reduction of deposit interest rate too.