New Delhi: The Reserve Bank of India (RBI) on Monday announced a special liquidity facility worth Rs 50,000 crore for mutual funds. The development comes days after Franklin Templeton Mutual Fund decided to close six debt schemes. Also Read - Bank Holiday Alert! Banks to Remain Shut For 12 Days in May 2021 | Check State-wise Full List
“With a view to easing liquidity pressures on MFs, it has been decided to open a special liquidity facility for mutual funds of Rs 50,000 crore. Heightened volatility in capital markets in reaction to COVID-19 has imposed liquidity strains on mutual funds (MFs), which have intensified in the wake of redemption pressures related to closure of some debt MFs and potential contagious effects therefrom,” the RBI said in a statement. Also Read - 'India Was on Verge of Defeating COVID-19 But...' NITI Aayog Official Says Second Wave Hurting Economy
The central bank, however, asserted that stress is confined to the high-risk debt mutual fund segment at this stage. Also Read - Are You Saving Money By Putting in Savings Account? Actually NOT
Furthermore, the RBI stressed that it remains vigilant and will take whatever steps are necessary to mitigate the economic impact of COVID-19 and preserve financial stability.
The central bank’s liquidity facility for mutual funds will be effective from today till May 11, 2020 or up to utilisation of the allocated amount, whichever is earlier.