We all know that the entire world is going through the worst phase of economic slowdown due to the outbreak of Coronavirus pandemic or COVID-19. The entire Economic world is going through the phase of economic slowdown and all the industrial sectors are shut down. All the People in India are following the norms of lockdown across the whole nation to save our lives. After all, health is the real wealth. But there is also a need at the end of livelihoods as well. We need to take care of both of them, we cannot neglect any of them. In the Same context, Reserve Bank Of India, RBI announced The Lifeline of ₹50,000 crores for mutual funds. This move was initiated by the Reserve Bank Of India, aiming to ease the liquidity pressure on the Mutual Fund Industry, which is going through the liquidity pressure and shortage of cash due to the Coronavirus pandemic’s Lockdown.
On Monday, The Reserve Bank of India announced the lifeline of Rs. 50,000 crore as a fund of liquidity for maintaining the mutual fund industry in India followed by the steps taken by Franklin Templeton.
Reserve Bank Of India announced fixed Repo Rates for 90 days
Under the SLF-MF, Reserve Bank of India RBI is going to conduct some repo operations of a tenor of 90 days with a fixed repo rate across the whole Industry. The Reserve Bank Of India made SLF-MF on-tap and open-ended, moreover All the banks and associated banking institutions are free to submit their bids to avail the facility of funding within working hours, any time from day Monday to Friday. This scheme would be available by the end of May 11, 2020, or until and unless the allocated amount remaining to be utilised as said by the Reserve Bank of India (RBI).
Exclusive utilisation of Fund
The Reserve Bank of India added that The Lifeline of Rs. 50,000 crore is totally for the benefits of Mutual Fund Industry and the banks and associated banking institutions can use this facility exclusively for the fulfilment of their liquidity needs and requirements of mutual funds. The deadline and the amount of the Lifeline for the Mutual Fund Industry might be reviewed when needed. It would depend upon the future factors and forces of markets in India.
The Reserve Bank of India stepped in with the aim of helping the Mutual Fund Industry for its liquidity pressure due to the Coronavirus pandemic.
On Friday, Franklin Templeton, an American firm in the Mutual Fund In Industry shut down its six active mutual funds in India. This act was triggering panic situations across the Mutual Fund industry in India. Experts of Mutual Funds predicted that it would give a big negative push down to the economy of India.
Reserve Bank Of India (RBI) also reiterated that it is committed to mitigating economic risks arising from Coronavirus pandemic. It would take all the necessary changes and amendments constantly in monitoring all the sections and sectors of the mutual fund industry.
Senior Congress leader P Chidambaram’s Statement
He also appreciated the step taken by The Reserve Bank of India (RBI) and said that I appreciate the announcement by the Reserve Bank of India in context of a Rs 50,000 crore as special liquidity facility for Mutual Funds.