RBI announces Rs 50,000 cr special liquidity for mutual funds after Franklin Templeton row

Reserve Bank of India on Monday anunced a Rs 50,000 crore special liquidity facility for mutual fund, days after Franklin Templeton Mutual Fund decided to close six debt schemes. In a statement, 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 wake of redemption pressures related to closure of some debt MFs and potential contagious effects refrom.

stress is, however, confined to high-risk debt MF segment at this st; 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.

Reserve Bank of India (RBI) also stressed it remains vigilant and will take whatever steps are necessary to mitigate ecomic impact of COVID-19 and preserve financial stability.