Debt Mutual Funds Witness Lower Redemption Since RBI's Liquidity Measure

AMFI said that redemptions under credit risk funds have tapered off "substantially" since the RBI's announcement

Debt Mutual Funds Witness Lower Redemption Since RBI's Liquidity Measure

Redemptions in debt funds have reduced substantially

Debt mutual funds have seen lesser number of investors exiting and opting to redeem their funds since the Reserve Bank of India, last week, announced a special liquidity facility worth Rs 50,000 crore for mutual funds.

In a release by the Association of Mutual Funds in India (AMFI), on Sunday, said that redemptions under credit risk funds, one of the debt mutual fund scheme category, have tapered off "substantially" since the RBI's announcement.

"There is 81.5% drop in net redemptions in Credit Risk Funds category on April 30, 2020 from the peak net redemptions as on April 27, 2020, courtesy measures announced by the RBI," the release stated.

''Declining trend in net redemptions from Credit  Risk  Funds is a welcome  development, indicative of  Investors comfort from RBI's special liquidity facility available to the MF industry. AMFI will continue to work with Regulators for normal functioning of the market," Nilesh Shah, Chairman of AMFI, said.

RBI's announcement came days after the US-based Franklin Templeton wound up six of its India funds. Three days later, the central bank extended the benefits to all banks, irrespective of whether they avail funding from the central bank or deploy their own resources under the scheme.