NEW DELHI: The Reserve Bank of India (RBI) may extend a special liquidity window for mutual funds (MFs) to ensure systemic stability and help them meet redemption pressure, particularly in debt schemes, sources familiar with the development told Mint.
This facility would be similar to the one the central bank had extended in 2008 at the time of the global financial crisis and then in 2013 when MFs faced a similar situation. “RBI has taken note of the prevalent market conditions and could extend a liquidity window for mutual funds to raise cheap short-term capital," one source said.
The source said operational issues -- whether banks will be encouraged to lend to MFs at cheaper rates or RBI will do it directly -- have not yet been