The Reserve Bank of India (RBI) on Monday announced a variable term repo auction of Rs 1 lakh crore even as it advanced the open market operation (OMO) purchase auction of Rs 15,000 crore to March 26.

The central bank also gave some relief to the non-banking finance companies (NBFCs) by extending the priority sector classification for bank loans to these entities for 2020-21.

The RBI’s announcement on the Rs 1 lakh crore variable term repo auction is being seen as another move to ensure that credit outflow is not affected because of the coronavirus outbreak, which has affected economic activity. The central bank is likely to cut the repo rate either on or before the monetary policy announcement on April 3.

“As a pre-emptive measure to tide over any frictional liquidity requirements on account of dislocations because of Covid-19, the RBI has decided to conduct variable rate repo auctions for Rs 1,00,000 crore in two tranches,” the central bank said in a notification on Monday.

Accordingly, it conducted a Rs 50,000-crore auction for a 16-day tenor. Results of the auction showed that the central bank received bids for Rs 31,585 crore and the cut-off rate was fixed at 5.16 per cent.

The second auction where funds will also be provided for a 16-day period will be held on Tuesday.

As a special measure, the RBI has also allowed standalone primary dealers to participate in these repo auctions. The RBI further said it is monitoring the evolving financial market conditions.

“We will calibrate our operations to meet any need for additional liquidity support, if warranted, to ensure normal functioning of markets, promote staff welfare and preserve financial stability,” the central bank said.

These auctions come at a time there are reports that the central bank may also accept corporate bonds as collateral. Reuters reported that the RBI may accept such bonds in repurchase operations to bring down the yields on these instruments.

In a separate announcement, the RBI said after a review of the current liquidity and financial conditions, it has decided to advance the second tranche of purchase of government securities under OMOs for Rs 15,000 crore to March 26. They were earlier scheduled to be conducted on March 30.

Last week, the central bank had announced an OMO purchase of Rs 30,000 crore, of which an auction of Rs 15,000 crore will be held on Tuesday.