Rs 50,000 Crore Special Liquidity Facility by the RBI to ease redemption pressure on Mutual Funds (MF) in the face of Covid-19 crisis would not only restore confidence in the MF industry but also ensure financial stability in the country, said ASSOCHAM secretary general, Mr Deepak Sood.
“The agility shown by the RBI by opening a special liquidity window for the banks to be used for the Mutual Funds would send re-assuring signals amongst millions of retail investors who have been shifting to the capital markets through MFs, from traditional avenues of gold, property or bank deposits. The MF industry has been built by painstaking efforts of India’s financial sector and it must be ring-fenced against completely unpredictable and unprecedented Covid-19 crisis,” Mr Sood said.
He said, the RBI is right in its assessment that the present stress in Mutual Fund schemes is confined to the high-risk debt segments and the larger industry remains liquid. “Besides, we are encouraged to see a reiteration by the RBI that it would ‘take whatever steps are necessary to mitigate the economic impact of COVID-19’. For preserving financial stability and easing the grave situation faced by the industry, across different sectors, the RBI in consultation with the Finance Ministry and the banks, should immediately consider a twin tool of roll-over and restructuring of loans. Both the roll-over and restructuring of debt must go hand-in-hand to preserve the underlying assets and businesses,” the ASSOCHAM Secretary General said.
He said, there are a large number of sectors like hotels, restaurants, airlines, travel operators, traders & exporters and manufacturing units in several of the areas to name a few, which have to re-start from the scratch. With over-a-month long lockdown, their working capital is exhausted and survival is at stake. “With no clarity about the immediate future, these businesses would find it hard to survive and service the bank loans, unless the same are restructured and rolled over.”