RBI announces ₹50,000 crore special liquidity facility for mutual funds

The Reserve Bank of India (RBI) on Monday (April 27) announced a ₹50,000 crore special liquidity facility for the mutual fund, days after Franklin Templeton Mutual Fund decided to close six debt schemes.

By :  Agencies
Update: 2020-04-27 05:59 GMT
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The Reserve Bank of India (RBI) on Monday (April 27) announced a ₹50,000 crore special liquidity facility for the mutual fund, days after Franklin Templeton Mutual Fund decided to close six debt schemes.

In a statement, the central bank said 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.

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The stress is, however, confined to the high-risk debt MF segment at this stage; the larger industry remains liquid, it said.

“With a view to easing liquidity pressures on MFs, it has been decided to open a special liquidity facility for mutual funds of ₹50,000 crore,” it said.

The RBI also stressed it remains vigilant and will take whatever steps are necessary to mitigate the economic impact of COVID-19 and preserve financial stability.

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