RBI Extends Benefits Of Liquidity Fund For Mutual Funds To All Banks

All banks, irrespective of whether they avail funding from the central bank or deploying their own resources will now enjoy the benefits

RBI Extends Benefits Of Liquidity Fund For Mutual Funds To All Banks

RBI had announced a special liquidity facility worth Rs 50,000 crore for mutual funds

The Reserve Bank of India (RBI) on Thursday extended the benefits of the earlier announced special liquidity facility for mutual funds (SLF-MF) to all banks, irrespective of whether they avail funding from the central bank or deploy their own resources under the scheme.

"Banks meeting the liquidity requirements of MFs by (1) extending loans, and (2) undertaking outright purchase of and/or 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 SLF-MF scheme without the need to avail back to back funding from the Reserve Bank under the SLF-MF," RBI said in an official release.

Earlier this week, RBI had  announced a special liquidity facility worth Rs 50,000 crore for mutual funds in a bid to ease liquidity pressures in the sector.

The decision had come close on the heels of US-based Franklin Templeton winding up six of its India funds following economic distress amid the coronavirus pandemic.