Turning to unconventional measures, long-term repo operations (LTROs) and targeted long-term repo operations (TLTROs) were undertaken to augment systemic liquidity, lower the banks’ cost of funds and influence longer-term interest rates more directly. While LTROs enhanced the overall liquidity in the system, TLTROs ensured the distribution of liquidity to specific sectors in need of funds.
Additionally, when redemption fears gripped the mutual fund industry, a special liquidity facility for mutual funds (SLFMF) was crafted virtually over a weekend. When these liquidity measures encountered risk aversion among banks in on-lending the RBI’s funds to troubled entities, special refinance facilities were provided to All India Financial Institutions (AIFIs) to mitigate sector-specific and small institution-specific liquidity constraints.