Mumbai: The Association of Mutual Funds in India (AMFI) on Sunday said that net redemptions under credit risk funds dropped 81.5 percent after the Reserve Bank of India (RBI) announced a special liquidity facility of Rs 50,000 crore for the mutual fund industry.
Credit risk fund is a debt mutual fund scheme category, which constitutes less than 5 per cent of total debt mutual fund AUM.
In a statement, AMFI said that net redemptions under credit risk funds stood at Rs 2,949.49 crore as on April 24, and peaked at Rs 4,294.36 crore as on April 27, 2020.
Thereafter, for the past three days, on Tuesday (April 28), and Wednesday and Thursday, the net redemptions under credit risk funds stood at Rs 1,847.29 crore, Rs 1,251.17 crore and Rs 793.99 crore, respectively.
“All Mutual Funds have met the redemptions in the normal course of business. There is 81.5 per cent drop in net redemptions in Credit Risk Funds category on April 30, 2020 from the peak net redemptions as on April 27, 2020, courtesy measures announced by the RBI,” it said.
Nilesh Shah, Chairman AMFI, said: “Declining trend in net redemptions from Credit Risk Funds is a welcome development, indicative of Investors’ comfort from RBI’s special liquidity facility available to the MF industry. AMFI will continue to work with Regulators for normal functioning of the market.”
To ease liquidity pressure on mutual funds, the Reserve Bank of India on April 27 decided to open a special liquidity facility (SLF-MF) worth Rs 50,000 crore.
Under the facility, the RBI shall conduct repo operations of 90 days tenor at the fixed repo rate. The apex bank said that SLF-MF is “on-tap and open-ended”, and banks can submit their bids to avail funding. Besides, the scheme is available till May 11, 2020 or “up to utilization of the allocated amount, whichever is earlier”.