The announcement of the Special Liquidity Facility for Mutual Funda came after Franklin Templeton, one of the first global financial firms to launch asset management operations in the country.
The central bank stated in a press statement that it shall conduct repo operations of 90 days tenor at the fixed repo rate. The SLF-MF is on-tap and open-ended. Banks can submit their bids to avail funding on any day from Monday to Friday.
The SLF-MF is available from today (April 27) to May 11or until the utilization of the allocated amount.
“RBI explained that funds availed under the SLF-MF shall be used by banks exclusively for meeting the liquidity requirements of mutual funds by extending loans, and 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 mutual funds”.
“Liquidity support availed under the SLF-MF would be eligible to be classified as held to maturity (HTM) even in excess of 25 percent of total investment permitted to be included in the HTM portfolio,” the central bank statement said.