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RBI announces Special Liquidity Facility for Mutual Funds of Rs. 50,000 crore

  • Category
    Miscellaneous
  • Published
    5th May, 2020

The Reserve Bank of India announced a Special Liquidity Facility for Mutual Funds (SLF-MF) of 50,000 crore rupees with a view to easing liquidity pressures on MFs.

  • The Reserve Bank of India announced a Special Liquidity Facility for Mutual Funds (SLF-MF) of 50,000 crore rupees with a view to easing liquidity pressures on MFs.
  • The heightened volatility in capital markets in reaction to COVID-19 has imposed liquidity strains on Mutual Funds, which have intensified in the wake of redemption pressures related to closure of some debt MFs and potential contagious effects therefrom
  • The Apex bank has said that under the Special Liquidity Facility for Mutual Funds (SLF-MF), the RBI shall conduct repo operations of 90 days tenor at the fixed repo rate
  • The SLF-MF is on-tap and open-ended and banks can submit their bids to avail funding on any day from Monday to Friday (excluding holidays). 
  • The scheme is available from till 11th of May or up to utilization of the allocated amount, whichever is earlier.
  • The funds availed under the SLF-MF shall be used by banks exclusively for meeting the liquidity requirements of MFs by extending loans, and by undertaking outright purchase of and or repos against the collateral of investment grade corporate bonds, Commercial Papers (CPs), debentures and Certificates of Deposit (CDs) held by MFs.
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