RBI extended regulatory benefits under SLF-MF to all banks

The Reserve Bank of India (RBI) extended the regulatory benefits under the special liquidity facility for mutual funds (SLF-MF) to all banks.

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Key-Points

Any bank that meets with the liquidity requirements of mutual funds by extending loans and undertaking outright purchase or repos against the collateral of investment-grade corporate bonds, commercial papers, debentures and certificates of deposit held by mutual funds will be eligible to claim all regulatory benefits.

To avail the regulatory benefits, the bank should 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 and the Department of Supervision on every Monday till the closure of the scheme.

On 27 April, the RBI announced the SLF-MF to ease liquidity strains on mutual funds. This intensified the redemption pressures related to the closure of some debt mutual funds and potential contagious effects.