The Reserve Bank of India (RBI) has curtailed the amount banks can invest in liquid and short term schemes of mutual funds, Times of India reports. Banks are allowed to invest up to 10% of their previous year’s net worth in liquid/short term debt schemes of mutual funds with weighted average maturity of portfolio of not more than one year.
RBI has given the banks six months to comply with the new rule. Implementation of the requirement is expected to remove about $11-13 million from the fund industry.
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