ASSOCHAM Secretary General Deepak Sood said Rs 50,000 crore Special Liquidity Facility by the RBI will ease redemption pressure on Mutual Funds would not only restore confidence in the industry but also ensure financial stability in the country.
“’The agility shown by the RBI by opening a special liquidity window for the banks to be used for the Mutual Funds would send re-assuring signals amongst millions of retail investors who have been shifting to the capital markets through MFs, from traditional avenues of gold, property or bank deposits,” Sood said.
The Mutual Funds industry has been built by painstaking efforts of India’s financial sector and it must be ring-fenced against completely unpredictable and unprecedented Covid-19 crisis, Sood said.
The ASSOCHAM said the RBI is right in its assessment that the present stress in Mutual Fund schemes is confined to the high-risk debt segments and the larger industry remains liquid.
“Besides, we are encouraged to see a reiteration by the RBI that it would take whatever steps are necessary to mitigate the economic impact of COVID19,” he said.
For preserving financial stability and easing the grave situation faced by the industry, across different sectors, the RBI in consultation with the Finance Ministry and the banks should immediately consider a twin tool of roll-over and restructuring of loans, Sood said.
Both the roll-over and restructuring of debt must go hand -in – hand to preserve the underlying assets and businesses, the ASSOCHAM Secretary General said.
He said sectors like hotels, restaurants, airlines, travel operators, traders & exporters and manufacturing units in several of the areas to name a few, which have to re-start from the scratch.
With over a month-long lockdown, their working capital is exhausted and survival is at stake.
“With no clarity about the immediate future, these businesses would find it hard to survive and service the bank loans, unless the same are restructured and rolled over,” he said.