All eyes are now on the upcoming long-term repo operations (TLTROs) aimed at helping the cash strapped non-banking finance companies (NBFCs) and micro-finance institutions (MFIs) — with the first round benefitting only certain top-rated companies.

Under TLTRO, banks mobilise funds for a tenor of three years that is linked to the repo rate and deploy them in instruments that have been specified by the central bank.

Last week, the RBI had announced TLTRO 2.0 for an aggregate amount of Rs 50,000 crore and the focus this time is on providing liquidity to small and medium-sized NBFCs and MFIs. The first auction of Rs 25,000 crore will be held on April 23.

However, questions remain on whether the RBI’s latest attempt will be successful.

Experts fear that in the current environment where cash flows of various units have taken a hit, some firms may have to pay higher rates for any fund raising from the debt market. There is also an apprehension that the auction may not see a huge response.

While the absolute number of investment grade mid- and small-sized firms is not available, Pankaj Naik, associate director at India Ratings, said such NBFCs have limited presence in the capital markets and, thus, investments through secondary market transactions would not be feasible.

Naik added in a note that NBFCs with an asset size of Rs 500-5,000 crore largely belong to BBB and A-rated categories and may have weaker liquidity than higher rated issuers.