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In a statement, “The central bank said that 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 the 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 (RBI) also stressed it remains vigilant and will take whatever steps are necessary to mitigate the economic impact of COVID-19 and preserve financial stability.