mumbai small nonbanking finance companies continued to be shunned by banks which availed only half of the rs 25000crore refinance offered by the rbi for lending to nbfcs this was despite the rbis attempt to improve the market for longterm bonds the central bank on thursday said that it would sell shortterm treasury bills and buy longterm government bonds while this brought down the yield on 10year gsecs by 16 basis points 100bps 1 percentage point to 606 it did nothing to help the nbfcsto provide support to nbfcs which are excluded from the threemonth moratorium extended to businesses hit by covid19 the rbi had opened a special facility this was the targeted longterm repo operation tltro 20 in this window the rbi would offer cheap threeyear funds through targeted longterm repo for up to rs 50000 crore only banks that lent to nbfcs could avail these funds with half of these reserves marked for small finance companies in thursdays rs 25000crore tltro banks applied for only rs 12800 croresince the covid19 outbreak the rbi has opened the liquidity tap leaving banks with nearly rs 7 lakh crore of surplus funds by not availing of tltro 20 banks are sending a signal that they are wary of credit risks a day before announcing operation twist on thursday banks bought a record rs 45000 crore of government treasury bills at rates below the rbis reverse repo rate of 375 this is the rate of interest that banks get when they keep their surplus money with the rbi the crash in tbill rates indicates that since the system is flush with funds banks are expecting the rbi to further cut reverse repo rates in the coming months bond dealers saidgiven the lack of risk appetite in banks a structure with partial credit guarantee by the government may be the only viable option to ease liquidity challenges of nbfcs said brickwork ratings director vydianathan ramaswamyreverse repo auctions are done by the rbi for banks to park their money for 13 days while tbills are for 91 days 182 days and 364 days so currently banks are willing to park their excess funds in tbills at a rate lower than what they could earn overnight from the rbi an indication that they expect the overnight rates to come down soon on wednesday tbills were auctioned at an annual yieldtomaturity ytm of 365374 a week prior to that the rbi sold 364day tbills at a ytm of 437 while a couple of days before the lockdown this was sold at 518 the low rates in tbills also show that the governments decision to raise money from shortterm treasury bills instead of longterm bonds is paying off rbi data showed that the government received bids aggregating rs 34 lakh crore for tbills worth rs 45000 crore that was on the block in the first quarter of the current fiscal the government plans to raise a record rs 45 lakh crore through weekly tbill auctions