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Coronavirus Relief: RBI announces special package of Rs 50,000 crore for mutual funds

mutual funds
mutual funds

Mutual funds Update: To ease liquidity pressure on mutual funds, the Reserve Bank of India (RBI) has today announced a special liquidity facility of Rs 50,000 crore for mutual funds.

The central bank has said that it is cautious and will take every necessary step to reduce the economic impact of the corona virus and maintain financial stability. RBI will initiate a repo operation of 90 days duration at fixed repo rate.

Under this facility, RBI will provide funds to banks at low rates and banks will be able to use the funds to meet the liquidity requirements of particular mutual funds.

RBI said that SLF-MF is on-top and open-ended and banks can submit their bids for securing finance any day from Monday to Friday. The facility has started from April 27 and will remain till May 11, 2020.

Last week, Franklin Templeton Mutual Fund, the eighth-largest mutual fund company in India, decided to voluntarily close six of its loan schemes. The central bank then took this step to provide relief. Franklin Templeton has done so by citing pressure to withdraw the unit and lack of liquidity in the bond market due to the Corona virus epidemic.

However the Association of Mutual Funds in India (AMFI) has assured investors that most of the fixed income mutual funds under management of assets are invested in high quality securities. These schemes have adequate liquidity, which ensures normal operations. Amphy has asked investors to continue focusing on their investment goals and stay in touch with their financial advisor.

Schemes that have closed include Franklin India Low Duration Fund, Franklin India Dynamic Acquired Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund and Franklin India Income Opportunities Fund.

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