RBI issues revised operational guidelines on on-tap SLTRO scheme for SFBs

The Reserve Bank of India (RBI) on Monday issued revised operational guidelines on the special long-term repo operations (SLTRO) scheme for small finance banks (SFBs).

In the monetary policy announced last week, the RBI had extended the on-tap SLTRO for SFBs till December 31, 2021. This facility was earlier made available till October 31, 2021.

The RBI in a statement on Monday said all SFBs eligible under the liquidity adjustment facility (LAF) can participate in the scheme.

"There is no tenure restriction regarding lending by SFBs under the scheme. However, the SFBs will have to ensure that the amount borrowed from the RBI should at all times be backed by lending to the specified segments till maturity of the SLTRO," the statement said.

Furthermore, SFBs should endeavour to lend within a reasonable period, i.e., not later than 30 days from the date of availing the funds from the RBI.

"The scheme will now be operationalised on tap," RBI said.

Accordingly, the last tranche of the SLTRO auction due on October 14, 2021, announced on May 7, 2021, will not be conducted, it said.

SFBs can place requests for funds through e-mail and the RBI will aggregate all such requests received and release funds every Monday (on the subsequent working day if Monday is a holiday) by initiating a three-year repo contract at repo rate with the requesting bank, the statement said.

Requests from the SFBs desirous of availing funds from the RBI will be subject to the availability of funds as on the date of application. The funds cannot be guaranteed in case the total amount of Rs 10,000 crore is already availed, the statement said.

In case the requested amount exceeds the remaining amount under the scheme on the date of operation, the remaining amount will be distributed on a pro-rata basis among all the eligible requests.

The RBI reserves the right to decide the quantum of allotment and/ or accept/ reject any or all the requests, either wholly/ partially, without assigning any reason thereof.

The eligible collateral and margin requirements will remain the same as applicable for LAF operations.

The amount utilised under the scheme will be informed to market participants in the money market operations (MMO), RBI said.