Business

Franklin Templeton Fall-Out : RBI Steps In, Announces Rs 50,000 Cr Special Liquidity Facility For Mutual Fund

File Picture

File Picture

Days after Franklin Templeton Mutual Fund decided to close six debt schemes, the Reserve Bank of India has announced a Rs 50,000 crore special liquidity facility for mutual fund.

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.

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 Rs 50,000 crore,” it said.

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

Reacting to the RBI move, Senior Congress leader and former Finance Minister P Chidambaram said, “I welcome the RBI’s announcement of a Rs 50,000 crore special liquidity facility for Mutual Funds. I am glad that RBI has taken note of the concerns expressed two days ago and requesting prompt action,” the Congress leader said on Twitter.

Most Popular

To Top