RBI Received Rs 1.71 Trillion in LTRO

Published on March 04, 2020
Current context: The Reserve Bank of India (RBI) has received Rs 1.71 trillion in the third Long-Term Repo Operation (LTRO) conducted for an amount of Rs 25,000 crore.
RBI Received Rs 1.71 Trillion in LTRO 

  • The LTRO is a tool under which RBI provides one-year to three-year money to banks at the prevailing repo rate, accepting government securities with matching or higher tenure as the collateral.
  • Unlike liquidity adjustment facility (LAF) and marginal standing facility (MSF), that offers banks money for a duration of 1-28 days, the LTRO supplies liquidity to banks for their 1-3 years needs.
  • LTROs are aimed at quickening the monetary policy transmission by helping banks to reduce their lending rates.
  • RBI said that, it has received 66 bids in the LTRO of three-year tenor, which has reversal date on 1st March 2023.
  • The total bids imply a bid to cover ratio of 6.9, which is the amount of bids received relative to the notified amount.
  • On 9th March 2020, the RBI will conduct another LTRO for three-year tenor worth Rs 25,000 crore.
  • RBI has already conducted two LTROs for Rs 25,000 crore each on 17th and 24th February 2020.

Question: 

Q.1 The Long-Term Repo Operation (LTRO) conducted by the Reserve Bank of India (RBI) provides liquidity to banks for ___________?
a. 1-2 years
b. 1-3 years
c. 1-4 years
d. 1-5 years

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