The Reserve Bank of India (RBI) has been extended till December 31, 2021, with special long-term repo operations (SLTRO) for small finance banks (SFBs). This will enable financial institutions to provide credit support to micro, small and medium enterprises, which will protect them from the impact of the corona virus epidemic.
It was announced by the Supreme Bank on Monday a few days after its monetary policy review that the pipeline on the SLTRO facility would be extended.
The Reserve Bank of India (RBI) in May this year extended the three-year SLDRO facility to small banks worth Rs 10,000 crore at a repo rate.
The facility is valid until October 31, 2021, and has now been extended to December 31 this year.
The extension was granted by the central bank keeping in mind the impact of the corona virus epidemic on small businesses and micro and medium enterprises.
What is SLTRO?
This is commonly referred to as long-term repo operations and is a tool by which the Reserve Bank disburses money to banks at the repo rate. In return, it accepts government bonds as a network. This facility is usually offered for one to three years.
How does the SLTRO facility help banks?
This can be very beneficial as banks get long term funding at low cost. Under this tool, banks can provide loans to low interest lenders without lowering the repo interest rates set by the RBI.