Special repo window to help mutual fund industry: CII

Industry body CII has welcomed the Reserve Bank of India’s decision to conduct a special 14 day repo at 9 per cent per annum for Rs 20,000 crores with a view to enabling banks to meet the liquidity requirements of mutual funds.

However, the chamber reiterated its earlier demand for a comprehensive cut in the repo rate, the rate at which the central bank lends to banks, by 100–150 basis points to fuel demand in the economy.

CII has said the special liquidity window would help the mutual fund industry with liquidity support at a time, when they could be facing redemption pressures.

The shortage in liquidity in the system continues to be around Rs 40,000 crores even after the reduction in cash reserve ratio, the amount of bank deposits set aside to meet statutory requirements for banks, it said in a statement.