while no rate cut was announced today by the rbi the long term repo operations ltro proposed to be conducted by the central bank may lead to banks reducing lending rates mclr and thereby bringing good news for borrowers with loans linked to this benchmark rbi intends to conduct these ltros to improve transmission of earlier rate cuts within the economywhat is ltroltro is a tool in which central bank offers money to banks for a period of one to three years at the prevailing repo rate currently at 515 per cent the banks in turn offer government securities with same or higher tenure as a collateral to the central bank why ltro is importantsince february 2019 rbi has cut rates in every monetary policy review back to back skipping only those in december 2019 and february 2020 however only a part of the earlier rate cuts have been passed by the banks to the borrowersfor instance in the calendar year 2019 the rbi held six monetary policy and cut the rates in total by 135 basis points 100 basis pointsbps 1 per cent however as per the data available on the sbi website only 65 bps has been passed to the customer in case of oneyear mclrto improve transmission of rate cuts the rbi introduced ltro in february 2020 in the ltro system rbi believes that offering banks durable longerterm liquidity at the repo rate can help them lower the rates they charge on retail and industrial loans while maintaining their margins according to rbi these efforts are being carried forward with a view to assuring banks about the availability of durable liquidity at reasonable cost relative to prevailing market conditions this should encourage banks to undertake maturity transformation smoothly and seamlessly so as to augment credit flows to productive sectorswill this reduce my emiso the question arises will this help in reducing your emi this is because despite five successive cuts by rbi since february 2019 it is likely that your emi outgo is still high due to slow transmission of the rate cuts by the banks anuj kacker coo and cofounder moneytap says earlier even with multiple repo rate cuts the banks were not able to provide lower interest rates on home and car loans with the introduction of ltro banks will have increased liquidity ltro will also encourage banks to increase retail lending options for home and car loans both being mclrlinked loans rbis ltros are expected to increase the proportion of lowcost funds with banks which in turn may then reduce their interest rates on loans consequently borrowers with loans where interest rate is linked to mclr may benefit due to reduction in emis