Reserve tranche is basically an emergency account that IMF members can access at any time without agreeing to conditions or paying a service fee.Tranche literally means a slice or a portion.
Each member of the IMF is assigned a quota (membership fee). A country’s Reserve Tranche Position (RTP) is the difference between IMF’s holdings of that country’s currency and the country’s IMF-designated quota.
Reserve Tranche Position is accounted for among a country’s foreign-exchange reserves. Part of the quota can be withdrawn from the IMF without any interest during critical situations of a country such as BOP crises.
