RBI's Rs 50,000 crore liquidity package for mutual funds
Corona: An announcement from RBI ... and relief given in MUTUAL FUNDS, find out the details
The Reserve Bank of India is seen making every possible effort to avoid an economic downturn during the Corona virus epidemic and lockdown. The central bank has twice announced a relief package since the lockdown began. The latest news in the midst of all this is that the RBI has now decided to breathe life into Mutual Funds.
New Delhi : The Reserve Bank of India (RBI) is making every effort to avert a recession during the Corona virus epidemic and lockdown. The central bank has twice announced a relief package since the lockdown began. The latest news in the midst of all this is that the RBI has now decided to breathe life into Mutual Funds.
50 thousand crore help
The RBI plans to pull Mutual Funds out of this crisis. For which Rs 50,000 crore has been announced. The RBI's scheme will be effective from today till May 11. In addition, the bank can apply to the RBI for funding on any business day. Experts say the RBI has announced the facility to ease liquidity pressure in mutual funds. With the announcement, the RBI reiterated that it would take all possible measures to preserve financial stability and reduce the impact of the Corona virus on the economy.The special loan package will run for a period of 27 April to 11 May 2020 or more
Financial liquidity will be maintained in the market for mutual funds and the minimum bid amount will be Rs. 1 crore or its multiple.
The announcement by mutual fund house Franklin Templeton to close its 6 debt scheme created a new crisis in the financial market. To overcome this crisis, the RBI has announced a special liquidity package of Rs 50,000 crore for mutual funds. On Monday, the Reserve Bank announced a special loan scheme. This Rs 50,000 crore will be used to avoid financial liquidity problems in industries. Under this facility, RBI will provide low interest rate funds to banks and banks will use MF to maintain financial liquidity. Loans will be provided to mutual funds by banks and securities of corporate bonds, commercial papers, certificates of deposits will be purchased in full by repo. The minimum bid amount will be Rs 1 crore or its multiple.
The RBI left the decision of moratorium to NBFC on the banks
The RBI also announced a moratorium on March 6 to rescue the NBFC. In which banks were allowed to provide financial assistance for 3 months. Banks were asked to take action after the board's approval. How much money do banks have now? Based on this, the RBI has left it to the banks to help the NBF. NBFC currently needs Rs 15000 to Rs 25000 for business. Former Finance Minister P. Praising the RBI's immediate action, Chidambaram tweeted, "I welcome the urgent announcement of a Rs 50,000 crore special liquidity fund for the MF." The RBI has taken this decision in view of the cheetah expressed two days ago and now urgent action is required.
The repo operation will be started at a fixed term of 90 days at RBI fixed repo rate
Why did this problem arise for mutual funds?
Corona and the lockdown have created an economic crisis on the business. As a result, the mutual funds that have given loans for business have been hit twice. On the one hand, investors are withdrawing their investments. Fund managers cannot liquidate bonds, there are no new investors in fund schemes, bond papers are being sold at negligible prices. Yet no one is willing to buy it. A total of Rs 2.3 lakh crore was withdrawn from the mutual fund industry in March. The figure was only Rs 1,985 crore in February, with companies withdrawing Rs 1.1 lakh crore from funds in March and Rs 43,825 crore in February to meet its money needs. Out of the fund's total assets of Rs 13.11 lakh crore, Rs 4.57 lakh crore is expected to mature in six months.
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