With reference to Long term repo operations LTROs consider following statements It intended to preve...........

Economic Affairs Money Supply and Monetary Policy

With reference to Long-term repo operations (LTROs), consider following statements

It intended to prevent short-term interest rates in the market from drifting a long way away from the policy rate, which is the repo rate.
It supplies them with liquidity for their 1- to 3-year needs.
It helps RBI to ensure that banks reduce their marginal cost of funds-based lending rate, without reducing policy rates.

Select the correct statement.

1&2 only

2&3 only

1&3 only

All of the above

It is a tool under which the central bank provides one-year to three-year money to banks at the prevailing repo rate, accepting government securities with matching or higher tenure as the collateral.
In LTRO the banks get long-term funds at lower rates, their cost of funds falls, which leads to reduce of interest rates for borrowers.
It helps RBI to ensure that banks reduce their marginal cost of funds-based lending rate, without reducing policy rates.
It also showed the market that RBI will not only rely on revising repo rates and conducting open market operations for its monetary policy, but also use new tools to achieve its intended objectives.
Its operations are intended to prevent short-term interest rates in the market from drifting a long way away from the policy rate, which is the repo rate. It supplies them with liquidity for their 1- to 3-year needs.

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