RBI should be flexible for WLTF banks to succeed: Bankers

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The Reserve Bank of India’s proposal to introduce wholesale and long-term finance (WLTF) banks can be a reality if the central bank and the government show flexibility on how these entities would manage their resources.
If the earlier mode continues, where funds are raised at a fixed rate, to finance projects at a flexible rate, it would be nothing but a continuation of the old development finance institution (DFI) model that died a natural death, say experts.
The Indian financial system has for long had a clear demarcation between banks and long-term finance providers. While DFIs would give project loans, banks were providers of working capital loans. DFIs would raise money from the market through bonds, guaranteed by the government. These bonds had Statutory Liquidity Ratio (SLR) status -- banks could buy and mortgage these with RBI to borrow money, something they do with government securities.document.write(""); googletag.cmd.push(function() { googletag.defineOutOfPageSlot('/6516239/outofpage_1x1_desktop', 'div-gpt-ad-1490771277198-0').addService(googletag.pubads()); googletag.pubads().enableSingleRequest(); googletag.pubads().enableSyncRendering(); googletag.enableServices(); });
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