The Reserve Bank of India’s (RBI) monetary policy announcements on 27 March, which aim to infuse liquidity into the system, are likely to address some of the concerns of debt mutual funds reeling under redemption pressure in the wake of the Covid-19 pandemic.
According to various reports, fund houses had approached RBI seeking a separate liquidity window to address the concern of rising redemption. The central bank had provided separate liquidity support to mutual funds during the global financial crisis of 2008, as well as during the 2013 liquidity crunch, when some categories of debt funds faced heavy redemption.
