The Reserve Bank of India (RBI) has announced a package of Rs 50,000 crore to help the debt securities market, which is under pressure due to lack of funds.
Debt funds are under pressure as they withdraw large-scale investments with the spread of Covid.
Franklin Templeton has withdrawn six debt-based funds from the market as liquidity dwindled and massive withdrawals. The RBI is following the same procedure.
Know the details
1. RBI’s liquidity facility is available from April 27 to May 11. Allocations for this purpose can be utilized during this period.
2. Extending time limits will be considered after assessing the market situation.
3. Banks can lend at low rates as per package. In the event of a shortage of liquidity, the banks should make the funds available to the fund companies.
4. Banks can grant loans on corporate bond, commercial paper, certificate of deposit and debentures.
5. Debt funds are currently under high risk.
The stock market surged after a series of steps to ensure liquidity in the mutual fund market. Sensex gains 750 points in opening trade
