Covid-19: MFs fear huge redemptions, write to RBI for liquidity support

Corporate investors seen pulling out funds from liquid schemes to meet their debt onligations as coronavirus takes toll on businesses

The mutual fund (MF) industry has written to the Reserve Bank of India (RBI) seeking liquidity support as it fears massive redemption pressure in the Rs 5 trillion liquid scheme category, with corporate investors pulling out funds to meet debt obligations as Coronavirus outbreak disrupts business operations.

According to sources, the industry has asked the RBI to increase the line of credit to Rs 1 trillion through a repo window for corporate bond and commercial papers.

“Institutional and corporate investors are unable to get funds from banks, given the stress in the system, which is forcing them to take out