The Reserve Bank of India (RBI) on Thursday further relaxed bank funding for the mutual fund sector when it extended the regulatory benefits under the special liquidity facility for mutual funds (SLF-MF) to all lenders.
In other words, banks do not need to borrow money from the special borrowing window of the RBI (to on-lend to mutual funds), they can enjoy the relaxed terms even if they provide finance to mutual funds from their own resources.
Earlier this week, the central bank had announced a Rs 50,000-crore special liquidity facility targeted at the mutual funds sector, which has been facing redemptions.
