TaxTMI 
TaxTMI 
Key Highlights of RBI Liquidity Support to Mutual Funds due to COVID-19
X X X X Extracts X X X X
X X X X Extracts X X X X
....ey Highlights of RBI Liquidity Support to Mutual Funds due to COVID-19<br>By: - CSLalit Rajput<br>FEMA - Foreign Exchange Management<br>Dated:- 30-4-2020<br><br>* RBI Announces ₹ 50,000 crore Special Liquidity Facility for RESERVE BANK OF INDIA, vide press release 2019-2020/2276 dated 27th April, 2020 has Announces ₹ 50,000 crore Special Liquidity Facility for Mutual Funds (SLF-MF) In....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... view of the situation arising due to COVID-19 pandemic and extended lockdown period. Why RBI Announces such Measure: * Heightened volatility in capital markets * liquidity strains on mutual funds (MFs), * redemption pressures related to closure of some debt MFs * potential contagious effects * to mitigate the economic impact of COVID-19 and preserve financial stability Scheme Applicab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ility: The scheme is available from today i.e., April 27, 2020 till May 11, 2020 or up to utilization of the allocated amount, whichever is earlier. Key Highlights: * With a view to easing liquidity pressures on MFs, it has been decided to open a special liquidity facility for mutual funds of ₹ 50,000 crore * Under the SLF-MF, the RBI shall conduct repo operations of 90 days tenor at t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he fixed repo rate * banks can submit their bids to avail funding on any day from Monday to Friday (excluding holidays). * The Reserve Bank will review the timeline and amount, depending upon market conditions. * Liquidity support would be eligible to be classified as held to maturity (HTM) even in excess of 25% of total investment permitted to be included in the HTM portfolio. Note: Suppor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t extended to MFs under the SLF-MF shall be exempted from banks' capital market exposure limits. Utilization of Funds Funds availed under the SLF-MF shall be used by banks exclusively for meeting the liquidity requirements of MFs by (1) extending loans, and (2) undertaking outright purchase of and/or repos against the collateral of investment grade corporate bonds, commercial papers (CPs), deb....
X X X X Extracts X X X X
X X X X Extracts X X X X
....entures and certificates of Deposit (CDs) held by MFs How to Avail Benefits: * This special repo window will be available to all LAF eligible banks and can be availed only for on-lending to Mutual funds * The eligible banks may place their bids electronically on the CBS platform between 9 AM and 12.00 Noon every day * The bidding process, settlement and reversal of SLF-MF repo would be simi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lar to the existing system being followed in case of LAF/MSF. * In case of over-subscription of the notified amount on any given day, the allotment will be done on pro-rata basis. * The minimum bid amount would be Rupees one crore and multiples thereof. The allotment would be in multiples of Rupees one crore. * A market participant can place bids of amount less than or equal to the notified ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....amount of the issue announced on a given day. * The eligible collateral and the applicable haircuts will remain the same as applicable for LAF. Note: While banks will decide the tenor of lending to /repo with mutual funds, the minimum tenor of repo with RBI will be for a period of three months. About Author: CS Lalit Rajput PARTNER AT Xcede Consultech LLP reached at [email protected] / ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....+91 8802581290<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....