have borrowed Rs 2,000 crore under the window opened for mutual funds on Monday, data released by the Reserve Bank of India (RBI) on Tuesday showed.

The special repo window, under which can borrow up to 90 days to give loans or buy debt papers of mutual funds, remains open till May 11. The total amount can borrow is Rs 50,000 crore.

Banks can bid under the facility on any working day. While there are still many days to go, the initial low response may suggest that the mutual fund industry has not yet faced redemption pressure, as was feared, according to a treasurer. This also bolsters the theory that the mutual fund crisis is a debt event limited to some schemes of Franklin Templeton.

If and when redemption pressure rises, the money can be fully utilised by banks, and the central bank can also possibly increase the limit, depending upon the severity.

Banks will borrow from the window and the mutual funds will have to do repo with banks to get the liquidity, using investment grade papers. They could also sell the papers directly to bank if they chose to.

The banking system continues to remain hugely in surplus mode. Banks parked Rs 7.27 trillion of their surplus with the on Tuesday.

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