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SLF-MF scheme benefits extended to all banks

  • IASbaba
  • May 1, 2020
  • 0
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SLF-MF scheme benefits extended to all banks

Part of: GS Prelims and GS-III – Economy 

In News:

  • 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. 

Mutual Fund

  • 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. 

Redemption

  • 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. 

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