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Financial Market Measures:: Liquidity Management Measures: Tltro

The document outlines various liquidity management and regulatory measures introduced by the Reserve Bank of India to address economic issues arising from the COVID-19 pandemic. These include: 1) TLTRO, CRR, LAF, and MSF measures to increase credit availability and lower interest rates to support borrowers. 2) Steps to augment liquidity in foreign exchange markets to help RBI intervene and reduce rupee spreads. 3) Regulatory measures to mitigate debt servicing burdens and ensure business continuity. 4) Postponing loan and credit card repayments to lessen financial burdens on various sectors.

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Somil Gupta
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32 views1 page

Financial Market Measures:: Liquidity Management Measures: Tltro

The document outlines various liquidity management and regulatory measures introduced by the Reserve Bank of India to address economic issues arising from the COVID-19 pandemic. These include: 1) TLTRO, CRR, LAF, and MSF measures to increase credit availability and lower interest rates to support borrowers. 2) Steps to augment liquidity in foreign exchange markets to help RBI intervene and reduce rupee spreads. 3) Regulatory measures to mitigate debt servicing burdens and ensure business continuity. 4) Postponing loan and credit card repayments to lessen financial burdens on various sectors.

Uploaded by

Somil Gupta
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Liquidity Management Measures:

TLTRO: This will increase the availability of credit to end borrowers, at lower or more competitive
interest rates.
CRR: will provide some relief for banks' reporting requirements and for its treasury staff under
the current unprecedented circumstances.
LAF: This move will oblige the banks to deploy the surplus funds to productive sectors of the
economy in the form of investments and loans instead of RBI.
MSF: This would in turn help banks make more money available to meet the needs of people as
this brings banks to a better position to make use of this facility

Financial Market Measures:

This step will augment liquidity in NDF and it will help RBI to intervene in the NDF market which
in turn will help increase arbitrage trades, thereby reducing the spread between the onshore
rupee forwards as well as the NDF.

Regulatory Measures:
These measures were introduced to mitigate the burden of debt servicing brought about by
disruptions on account of COVID-19 and to ensure the continuity of viable businesses.
Repayment of Schedules:
This measure will be extremely helpful in lowering the burden for various sectors including the
developers as they will be able to focus on faster execution of projects and for those who are
paying EMIs or using credit cards.
Easing of Working Capital Financing
This will provide banks a lot of leverage to make an informed assessment and in giving
differentiated treatment to each and every industry depending upon the impact of COVID-19 on
them
Deferment of Implementation of Net Stable Funding Ratio (NSFR)
 It helps in mitigating the risk of future funding stress as it reduces funding risk by requiring
banks to fund their activities with sufficiently stable sources of funding over a period of one year.
Asset Classification and loans to commercial real estate projects by NBFCs
This will improve the developers' cash flows for execution and completion of the project and
improve the future saleability of their projects and their cash flows as an extended period for
restructuring of assets gives time to those realtors who have been waiting for demand revival.

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