Mumbai: The Reserve Bank of India has extended the deadline for banks to include loans to mutual funds and the Irrevocable Payment Commitments (IPCs) to stock exchanges (BSE & NSE) on behalf of MFs or FIIs under the capital market exposure by three months — from September 13 to December 13.
This is the second time that the RBI is extending the deadline. In June, the RBI had extended the deadline by three months to September 13.
While banks have extended large loan to mutual funds and also issued IPCs to the stock exchanges on behalf of MFs or FIIs, they have not included these under their capital market exposure for computation. Therefore, the RBI, upon review, has decided to extend the deadline for banks to comply with the guideline, said a notice issued on Wednesday.
As per RBI guidelines, banks can grant loans and advances to MFs only to meet their temporary liquidity needs for the purpose of repurchase or redemption of units within the ceiling of 20 per cent of the net asset of the scheme and for a period not exceeding six months. Such finance, if extended to equity-oriented mutual funds, will form part of banks’ capital market exposure.
