The Reserve Bank on Wednesday opened a special borrowing window of Rs 25,000 crore to help the crisis-ridden mutual funds tide over liquidity problems.
As a “contingency measure”, RBI has decided to conduct a special 3-day repo auction under which banks would be encouraged to raise funds totalling Rs 25,000 crore at 10.25 per cent for onlending to the mutual funds. “This facility will be made available for a temporary period until further notice,” RBI said in a notification.
The mutual fund industry has been facing consistent equity folio closures in the past few months mainly due to profit booking and various merger schemes in the industry. Folios are numbers designated to individual investor accounts, although one investor can have multiple folios.