RBI includes all 26 stressed sectors within the ambit of the ‘On Tap TLTRO scheme’

On Thursday (11.12.2020) RBI announced that in addition to the five sectors, twenty-six stressed sectors brought under On Tap TLTRO Scheme. On October 21, 2020, Th Reserve Bank of India had announced the five stressed sectors under the ambit of On Tap TLTRO scheme in synergy with the credit guarantee under the Emergency Credit Line Guarantee Scheme (ECLGS 2.0) of the Government (ECLGS 2.0). The banking regulator had earlier made the above announcement in the Statement on Developmental and Regulatory Policies dated December 04, 2020. The stipulation under ECLGS 2.0 that only entities with outstanding between Rs50 crore and Rs500 crore shall be eligible for the credit guarantee shall, however, not apply to funds availed under On Tap TLTRO, the RBI statement said.

The K.V.Kamath committee appointed by RBI has in its report of August 2020 identified 26 sectors as stressed sectors on account of Covid 19. On the basis of above report the regulator announced conducting ‘On tap Targeted Long-term Repo Operations’ of up to three years tenor for a total amount of up to Rs100000 crore at a floating rate linked to the policy repo rate. The Liquidity availed by banks under the above scheme has to be deployed in corporate bonds, commercial paper and non-convertible debentures issued by the entities of five sectors initially identified. The fundsflow under the scheme is over and above the outstanding level of their investments in such instruments as on September 30, 2020. Liquidity availed under the scheme can also be used to extend loans and advances to these sectors. Investments made by banks under this facility will be classified as held to maturity (HTM) even in excess of 25 percent of total investment permitted to be included in the HTM portfolio. All exposures under this facility will also be exempted from reckoning under the large exposure framework (LEF).

The Scheme will remain operational from October 22, 2020 till March 31, 2021.