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Tribune News Service
New Delhi, April 27
Rs 50,000-cr Liquidity Facility For Mutual Funds
The facility will be available to the banks for a fortnight and has been introduced after Franklin Templeton temporarily closed down six debt-based schemes due to heavy selling pressure
The RBI said the stress at present was restricted to high-risk debt-oriented mutual funds while the larger industry had adequate funds to meet its commitments
Banks will have to use the fund exclusively for meeting the liquidity requirements of mutual funds by extending loans against collaterals
Reserve Bank of India Governor Shaktikanta Das today sounded a note of caution over stimulus measures so that the country does not face a repeat of 2008-09 when the UPA government’s resuscitation attempts led to high inflation and NPA problem.
“The mantra of coming out of the ‘chakravyuh’ has also to be thought out very carefully and factored in when entering the ‘chakravyuh’,” he said.
“Whether it relates to fiscal deficit or liquidity or any other extraordinary measure, it has to be applied in time, and the exit also has to be made in time,” Das added in his first interview over a month after the country entered into a lockdown.
Arguing for a time frame to withdraw the accommodation offered to the industry in the form of easy liquidity and debt moratoriums, he said it did not mean that this should be done quickly.
To ensure the markets didn’t think the RBI was going into a tightening mode in near future, he emphasised the withdrawals would be made when things were working and near normal.
The RBI chief was, however, noncommittal on whether the government would print money to make up for the shortfall in GST collection and direct taxes but was sure that the upper limit of fiscal deficit was certain to be breached.
Several former RBI Governors have suggested that to raise resources, the RBI should print money, which, they feel, will not lead to inflationary pressure in the current situation.
The RBI chief said though some foreign investors were influenced by rating agencies, by and large they had exhibited trust in the macro-fundamentals of Indian economy, irrespective of rating upgrade or downgrade.
The mantra of coming out of ‘chakravyuh’ has to be thought out very carefully and factored in when entering ‘chakravyuh’.
Shaktikanta Das, RBI Governor
He also allayed fears about a shortfall in foreign exchange reserves as the US Federal Reserve has opened up a dollar repo window for central banks. Besides, India also has a bilateral swap arrangement with the Bank of Japan.
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