What changed
The relaxations on loans to mutual funds against and buy-back of Certificates of Deposits, initially allowed for 15 days from October 14, 2008, have been extended indefinitely. The earlier circular's provisions remain in force until RBI issues further advice.
What it means for you
Banks can continue lending to mutual funds against CDs and facilitating CD buy-backs without the previous time limit, supporting liquidity in the mutual fund sector. This extension provides operational certainty for banks dealing with mutual fund clients, especially during the 2008 financial stress period.
What you must do
- Continue to apply the relaxations from the October 14, 2008 circular until further RBI advice
- Monitor for any future RBI circulars that may modify or withdraw these relaxations
- Ensure internal policies align with the extended validity of these relaxations
Who it affects
All commercial banks (excluding LABs and RRBs), All-India Term Lending and Refinancing Institutions
What specific relaxations were extended?
The relaxations relate to loans to mutual funds against Certificates of Deposits and the buy-back of CDs, as detailed in the October 14, 2008 circular.
How long will these relaxations remain in force?
They will continue until further advice from RBI, meaning no fixed end date has been set.