The move to withdraw high-denomination bank notes could open the floodgates for temporary inflows into the Rs 16 lakh-crore mutual fund (MF) sector. According to estimates, MFs could get an incremental Rs 50,000 crore in the next two months by way of investments from banks, which are flush with liquidity.
It is estimated that the total value of currencies in the Rs 500 and Rs 1,000 denominations at the end of March 2016 was about Rs 14.3 lakh crore. Depending on the quantum of black money, anywhere between Rs 8-12 lakh could come into the banking system in the next few weeks. Of this, a small portion, estimated at about Rs 50,000 crore could flow into the debt schemes (mostly liquid schemes) of mutual funds over the next two months, said experts.
