SLF-MF scheme benefits extended to all banks
Part of: GS Prelims and GS-III – Economy
- The Reserve Bank of India (RBI) has extended regulatory benefits to all banks under the Special Liquidity Facility for Mutual Funds (SLF-MF) scheme.
- The extension includes those banks also which are using their own resources to extend liquidity support to the mutual funds.
Important value additions:
Special Liquidity Facility for Mutual Funds (SLF-MF) scheme
- Recently, the RBI had announced Rs 50,000-crore SLF-MF scheme to bailout the mutual funds facing redemption pressure.
- The scheme was announced in the backdrop of Franklin Templeton Mutual Fund deciding to shut several schemes.
- Banks meeting the liquidity requirements of MFs will be eligible to claim all the regulatory benefits available under the scheme.
- A mutual fund is a type of financial vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets.
- In finance, redemption describes the repayment of any money market fixed-income security at or before the asset’s maturity date.
- Investors can make redemptions by selling part or all of their investments such as shares, bonds, or mutual funds.