The Reserve Bank of India (RBI) on Thursday extended the regulatory benefits announced under the SLF-MF scheme to all banks, irrespective of whether they avail funding from the Central Bank or deploy their own resources.
The RBI announced special liquidity facility for mutual funds (SLF-MF) worth Rs 50,000 crore on Monday to ease liquidity in the segment, which intensified in the wake of redemption pressures related to closure of some debt MFs and potential contagious effects.
The decision on scheme followed Franklin Templeton Mutual Fund shutting down six of its funds due to credit issues.
It has now been decided that all banks meeting the liquidity requirements of MFs by extending loans, and undertaking outright purchase of repos against the collateral of investment grade corporate bonds, commercial paper (CPs), debentures and certificates of deposit (CDs) held by MFs will be eligible to claim all the regulatory benefits available under the SLF-MF scheme without the need to avail back to back funding from the RBI.
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