SLF-MF scheme: Reserve Bank of India extends regulatory benefits to all banks

Mumbai: The Reserve Bank of India on Thursday prolonged regulatory benefits to all banks together with these deploying their very own assets to prolong liquidity help to the mutual funds underneath the Special Liquidity Facility for Mutual Funds (SLF-MF) scheme.

Earlier within the week, the Reserve Bank had introduced Rs 50,000-crore SLF-MF scheme to bailout the mutual funds dealing with redemption stress. The scheme was introduced within the backdrop of Franklin Templeton Mutual Fund deciding to shut a number of schemes.

“Based on requests received from banks, it has now been decided that the regulatory benefits announced under the SLF-MF scheme will be extended to all banks, irrespective of whether they avail funding from the Reserve Bank or deploy their own resources under the …Scheme,” Reserve Bank of India mentioned in a launch.

The RBI additional mentioned banks assembly the liquidity necessities of MFs by extending loans and endeavor outright buy of and/or repos towards the collateral of funding grade company bonds, business paper (CPs), debentures and certificates of deposit (CDs) held by MFs, shall be eligible to declare all the regulatory benefits out there underneath the scheme.

The banks claiming the regulatory benefits could be required to submit a weekly assertion containing consolidated info on entity-wise and instrument-wise loans and advances prolonged or funding made to eligible entities to Financial Markets Operations Department and to Department of Supervision on each Monday until the closure of the scheme, the RBI mentioned.

The Rs 50,000 crore liquidity window got here days after, the Franklin Templeton Mutual Fund, which has been working in India for 25 years, determined to shut down Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund and Franklin India Income Opportunities Fund.

Last time, RBI had opened a particular borrowing window of Rs 25,000 crore for banks to assist meet the money necessities of mutual funds in July 2013.

Post the collapse of Lehman Brothers, RBI, in October, 2008, had supplied the same further liquidity help completely for mutual fund trade.

The central financial institution additionally harassed it stays vigilant and can take no matter steps are crucial to mitigate the financial impression of COVID-19 and protect monetary stability.

Under the Special Liquidity Facility for Mutual Funds (SLF-MF), the RBI will conduct repo operations of 90 days tenor on the fastened repo fee. 

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