The Reserve Bank of India (RBI) cut the reverse repo rate by 25 basis points to 3.75 per cent even as it kept the repo rate unchanged at 4.4 per cent, the increased spread between the two key policy rates meant to tell the banks to not park their money with the central bank and instead lend more to corporate and individuals. The central bank today took several steps to improve liquidity in the money markets, particularly for non-banking finance companies (NBFCs) as they were finding it hard to raise funds. Announcing the launch of second installment of targeted long term repo operations TLTRO 2.0  for easing credit to NBFCs, Das said the central bank will conduct them for an amount of Rs 50,000 crore, to begin with, in tranches of appropriate sizes.
Das said the funds will have to be invested in investment grade bonds, commercial paper, non-convertible debentures of NBFCs with at least 50 per cent of it going to small and mid-sized NBFCs and micro finance institutions (MFIs) within one month of availing the credit from RBI.
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