On April 30, 2020, the Reserve Bank of India (RBI) extended the regulatory benefits under the Special liquidity facility for mutual funds (SLF-MF) to all banks, irrespective of whether they avail funding from the Reserve Bank or deploy their own resources under SLF-MF scheme. This decision has been taken on the lines of request made by banks to RBI.
- As we have notified earlier,on April 27, 2020, RBI has initiated a special liquidity facility of Rs 50,000 crore for MFs under which RBI will conduct repo operations of 90 days tenor at the fixed repo rate.Click Here to Read. So, the above mentioned extension is a part of this scheme.
Eligibility criteria to claim the regulatory benefits under SLF-MF scheme:
-Banks meeting the liquidity requirements of MFs by extending loans,
-Banks undertaking an outright purchase of and/or repo against the collateral of investment-grade corporate bonds, commercial paper (CPs), debentures and certificates of deposit (CDs) held by MFs.
Benefits for banks: The bank claiming these extended regulatory benefits will not be required to avail back-to-back funding from the central bank under the SLF-MF scheme.
Direction for banks: Submission of Weekly Statement
The bank claiming these extended regulatory benefits will be required to submit a weekly statement containing consolidated information on entity-wise and instrument-wise loans and advances extended or investment made to eligible entities to Financial Markets Operations Department (email) and to Department of Supervision (email) on every Monday till the closure of the scheme.
The SLF-MF scheme will remain open until May 11, 2020, or up to utilization of the allocated amount.
Background:
Rs 50,000 crore liquidity window came days after, the Franklin Templeton Mutual Fund, which has been operating in India for 25 years, decided 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.
Click Here for Official Notification
About Reserve Bank of India (RBI):
Headquarters– Mumbai, Maharashtra
Formation– 1 April 1935
Governor– Shaktikanta Das
Deputy Governors– 4 (Bibhu Prasad Kanungo, Mahesh Kumar Jain, Michael Debabrata Patra, one is yet to be appointed).
