MUMBAI : The central bank on Monday opened a ₹ 50,000-crore special credit facility to help mutual funds (MFs) tide over redemption pressures caused by the collapse of six Franklin Templeton funds and prevent panicked investors from withdrawing their money in the midst of a crisis.
The Reserve Bank of India’s move is primarily aimed at assuring investors that adequate money is available to meet redemption demands and to help the asset managers avoid distressed sales of holdings by mutual funds.
Franklin Templeton’s decision to wind up six credit funds for lack of liquidity has prompted fears that investors will rush to withdraw money from debt funds.