RBI/2008-09/223
DBOD.BP.BC.No.59/21.03.009/2008-09 October
14, 2008 All Scheduled Commercial Banks (excluding RRBs
and LABs)
and All-India Term Lending and Refinancing Institutions Dear
Sirs, Loans to mutual funds against and buy back of Certificates
of Deposits (CDs) Please
refer to para 12 of the Master
Circular No. FMD.MSRG.No.21/02.08.003/ 2008-09 July 1, 2008 on Guidelines
for Issue of Certificates of Deposit in terms of which the banks and FIs are not
permitted to grant loans against CDs. Furthermore, they are also not permitted
to buy-back their own CDs before maturity. 2. On a review,
it has been decided to relax these restrictions on lending and buy back, for a
period of 15 days from the date of this Circular, only in respect of the CDs held
by mutual funds. 3. While granting
such loans to the mutual funds, the banks should keep in view the provisions of
paragraph 44(2) of the SEBI (Mutual Funds) Regulations, 1996. Further, such finance,
if extended to equity-oriented mutual funds, will form part of banks' capital
market exposure, as hitherto.
Yours faithfully, (Prashant Saran)
Chief
General Manager-in-Charge |
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