MUMBAI: The Reserve Bank of India (RBI) on Tuesday relaxed its rules for targeted long-term repo operations (TLTRO) by allowing priority sector status to investments by banks in some non-banking financial companies (NBFCs) and microfinance institutions (MFIs).
The central bank had specified that under the TLTRO 2.0 scheme, banks will have to invest at least 50% of the total funds in bonds of small NBFCs of asset size of ₹500 crore and below, mid-sized NBFCs of asset size between ₹500-5,00 crore and MFIs.
At present, banks have to disburse 40% of their total loans to sectors like agriculture, small businesses, education, social infrastructure, among others, collectively known as priority sectors.