MUMBAI: India’s central bank has opened a new credit facility for mutual funds (MFs) to help money managers avoid distress sale of assets and calm investor concerns after Franklin Templeton shut six of them last week citing a lack of liquidity.
The Reserve Bank of India (RBI) will offer as much as 500 billion rupees (US$6.6bil) from yesterday, which banks can borrow and then lend to mutual funds, or buy investment-grade debt held by the funds, it said in a statement. The programme will end on May 11 or when the funds are utilised, whichever is earlier, it said.