The Reserve Bank of India’s surprise 100-basis-point cut in the cash reserve ratio (CRR) and a 50-basis-point repo rate cut is expected to significantly benefit debt mutual funds, according to fund managers.
The CRR cut is estimated to release Rs 2.5 lakh crore liquidity into the system during the second half of FY26.
Harshal Joshi, Senior Vice President – Fixed Income at Bandhan AMC, said: “The CRR cut and aggressive repo rate cut from the RBI provide greater clarity to investors about what to expect from the debt market in the coming quarters. The focus on transmission through lower rates, along with active liquidity creation, should ideally bring down the yield curve.”
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