The RBI has extended the benefits of the special liquidity facility for mutual fund scheme to all the banks, irrespective of whether they avail funding from the central bank or deploy their own resources under the scheme.
Some of the benefits for the loans extended under the scheme include classification of such investments under the ‘held to maturity’, such exposures not be reckoned under large exposure framework. Exposures under this facility will not be reckoned under the Large Exposure Framework and also exempted from banks’ capital market exposure limits. There are a number of mutual funds sponsored by banks, and these banks are providing liquidity support to the MFs from their own funds.
