MUMBAI: Experts on Monday termed the RBI's move to open a special liquidity facility of Rs 50,000 crore for the mutual fund sector as "brilliant", saying it will improve investor confidence and reduce stress in the corporate debt market.
The Reserve Bank of India's decision comes days after Franklin Templeton Mutual Fund decided to close six debt schemes with assets under management of more than Rs 25,000 crore. With a view to easing liquidity pressures on mutual funds, the RBI decided to open a special liquidity facility of Rs 50,000 crore.
The RBI also highlighted that the stress, however, is confined to the high-risk debt mutual fund (MF) segment at this stage; the larger industry remains liquid. Mutual fund industry body Amfi Chairman Nilesh Shah said it is a good confidence building measure to ensure continued confidence of investors on the industry as also normal functioning of the markets.
Nimesh Shah, MD and CEO at ICICI Prudential AMC, said that as a pre-emptive step, the RBI through its announcement of special liquidity facility for mutual funds has aimed to reduce the stress in the corporate bond segment. "...This is a welcome and positive step which will improve investor sentiments.
We believe that a deflationary environment where prices come down across asset classes makes debt an interesting asset class to invest in today," he added. Given the incident about winding up of six debt-oriented schemes of Franklin Templeton MF, there was much anxiousness and concern among investors, specially retail clients.
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