Due to capital market volatility brought on by the Covid-19 pandemic, the Reserve Bank of India (RBI) opened a three-month liquidity facility of 500 billion rupees (about 6.5 billion dollars) for mutual funds.
The central bank's move to boost investor confidence comes days after US-based investment management firm Franklin Templeton wound down six of its India funds, citing severe market dislocation and redemption pressure caused by the pandemic.
Franklin Templeton is one of the larger investment firms in India and the closure of its funds led to concerns that other fund houses could face a further flood of panic withdrawals.
The central bank said it would take whatever steps were necessary to mitigate the economic impact of Covid-19 and preserve financial stability. To curb the spread of the virus, India is under a nationwide lockdown since March 25. The lockdown is scheduled to end on May 3.
