RBI Announces Rs 50,000 Crore Special Liquidity Facility For Mutual Funds

New Delhi: The Reserve Bank of India (RBI) on Monday announced a special liquidity facility worth Rs 50,000 crore for mutual funds. 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. Also Read – Prolonged Lockdown May Push Millions Into ‘Margins of Subsistence’, Says Ex-RBI Governor Duvvuri Subbarao

“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 circular. Also Read – RBI’s First Monetary Policy Committee Meet to be Held in June

The RBI however said that stress is confined to the high-risk debt mutual fund segment at this stage. Also Read – ‘Would Help Small Businesses, MSMEs, Poor’: PM Modi Applauds RBI’s Relief Steps

“The larger industry remains liquid,” the central bank added.