RBI's Rs 50,000 cr fund announcement will protect small investors: Nadda

New Delhi: BJP chief J P Nadda on Monday said the RBI’s announcement of Rs 50,000 crore liquidity facility for mutual funds will take forward the Union government’s measures to protect small investors amid the challenges facing the economy due to COVID-19.

“COVID-19 has brought many challenges to our economy. To deal with this, PM Narendra Modi government has taken many prompt decisions. Taking it forward and to protect small investors interests, I welcome RBI’s announcement of Rs 50,000 crore special liquidity facility for mutual funds,” Nadda said.

The ruling Bharatiya Janata Party (BJP) said on its Twitter handle that the measure will stabilise the performance of short-term debt funds and improve investor sentiment about the debt market.

The Reserve Bank of India (RBI) on Monday provided a Rs 50,000-crore shot in the arm to stressed mutual funds by unveiling a special liquidity facility for the sector, days after Franklin Templeton Mutual Fund decided to close six debt schemes.

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.