RBI extends regulatory benefits under SLF-MF scheme to all banks

Published : Apr 30, 2020, 2:30 PM IST

Updated : Apr 30, 2020, 4:09 PM IST

It has now been decided that all banks meeting the liquidity requirements of MFs by extending loans, and undertaking outright purchase of repos against the collateral of investment grade corporate bonds, commercial paper (CPs), debentures and certificates of deposit (CDs) held by MFs will be eligible to claim all the regulatory benefits available under the SLF-MF scheme without the need to avail back to back funding from the RBI.

RBI extends regulatory benefits under SLF-MF scheme to all banks

Mumbai: The Reserve Bank of India (RBI) on Thursday extended the regulatory benefits announced under the SLF-MF scheme to all banks, irrespective of whether they avail funding from the Central Bank or deploy their own resources.

The RBI announced special liquidity facility for mutual funds (SLF-MF) worth Rs 50,000 crore on Monday to ease liquidity in the segment, which intensified in the wake of redemption pressures related to closure of some debt MFs and potential contagious effects.

The decision on scheme followed Franklin Templeton Mutual Fund shutting down six of its funds due to credit issues.

It has now been decided that all banks meeting the liquidity requirements of MFs by extending loans, and undertaking outright purchase of repos against the collateral of investment grade corporate bonds, commercial paper (CPs), debentures and certificates of deposit (CDs) held by MFs will be eligible to claim all the regulatory benefits available under the SLF-MF scheme without the need to avail back to back funding from the RBI.

The bank claiming the regulatory benefits would only be required to submit a weekly statement containing consolidated information on entity-wise and instrument-wise loans and advances extended or investment made, the apex bank said in a statement.

Under the SLF-MF scheme, the RBI will conduct repo operations of 90 days tenor at the fixed repo rate. It is an "on-tap and open-ended", scheme and banks can submit their bids to avail funding. Besides, the scheme is available from April 27 till May 11, 2020 or "up to utilisation of the allocated amount, whichever is earlier".

"Liquidity support availed under the SLF-MF scheme would be eligible to be classified as held to maturity (HTM) even in excess of 25 per cent of total investment permitted to be included in the HTM portfolio. Exposures under this facility will not be reckoned under the Large Exposure Framework (LEF)," an earlier RBI statement on the scheme has said.

Truncated trading hours for debt, currency markets extended till further notice: RBI

Amid uncertainty over the lockdown period, the Reserve Bank has also extended the truncated trading hours of debt as well as currency markets till further notice.

In order to minimise risks arising due to the unprecedented situation created by COVID-19 outbreak, the trading hours for various RBI regulated markets were earlier amended as 10.00 am to 2.00 pm, effective from April 7 till the close of business hours on April 30, 2020.

In a statement, the Reserve Bank of India said there is a likelihood of extension of lockdown in major cities like Mumbai or easing of the restrictions in a limited manner.

"In view of persisting operational dislocations and elevated levels of health risks warranting continuing restrictions on movement, work from home arrangements and business continuity plans, it has been decided that the amended trading hours i e, from 10.00 am to 2.00 pm for RBI-regulated markets...shall be extended till further notice," it said.

Market trading timings will be reviewed on issuance of directions pertaining to the lockdown from the government, the central bank added.

As per the revised timings, the RBI regulated market opens at 10 am instead of 9 am earlier. The closing timings too have been revised to 2 pm for all segment.

COVID-19: RBI grants more time to banks to file regulatory returns

The RBI on Thursday permitted banks to file regulatory returns with a delay of up to 30 days from the due date as several entities face difficulties in timely submission in view of the disruptions on account of the coronavirus outbreak.

The central bank has listed 18 regulatory returns which banks and All India Financial Institutions can submit with a delay of a maximum 30 days.

These include 'payment of dividend', 'statement of shareholding (Restrictions on holding shares)', 'PSU investment statement' and 'return on large exposure'.

"In order to mitigate the difficulties in timely submission of various regulatory returns, in view of disruptions on account of COVID-19 pandemic, it has been decided to extend the timelines for their submission," the Reserve Bank of India said in a circular.

Accordingly, all regulatory returns required to be submitted by such entities to the Department of Regulation can be submitted with a delay of up to 30 days from the due date.

"The extension will be applicable to regulatory returns required to be submitted upto June 30, 2020," it said.

(IANS and PTI Report)