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RBI opens special liquidity facility for mutual funds

Date: 28 April 2020 Tags: Monetary Policy & RBI
  • The Reserve Bank of India (RBI) will open a special liquidity window of ? 50,000 crore to ease pressure on mutual funds, which are facing liquidity strains due to heightened volatility in capital markets in the wake of the Covid-19 outbreak.
  • The liquidity strains have intensified amid redemption pressures related to the closure of some debt MFs and potential contagious effects.
  • Banks will draw funds under the Special Liquidity Facility-Mutual Fund (SLF) exclusively for meeting the liquidity requirements of MFs by extending loans. Bank could also make outright purchase of investment-grade corporate bonds, commercial papers (CPs), debentures and certificates of Deposit (CDs) held by MFs.