SLF-MF scheme benefits extended to all banks

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.