Lifeline for MFs: PMO suggests steps for resolution of stressed assets

Writes to DEA and Sebi for Covid-19 support fund for closed-ended debt schemes

The Prime Minister’s Office (PMO) has suggested regulatory steps and liquidity to help mutual funds (MFs) that have exposure to stressed companies. 

These include setting up a Covid-19 Support Fund for closed-ended debt schemes. Such schemes do not permit entry and exit for investors till the end of tenure.

The move could throw a lifeline to asset management companies (AMCs) that have been plagued by a liquidity crisis, mostly on the debt side, for the past two years, starting with the Infrastructure Leasing & Financial Services fiasco. The crisis was exacerbated by Franklin Templeton’s decision to shut down six debt