RBI pumps in Rs 20,000 cr to help mutual funds

PC SAYS: Chidambaram lauded RBI's decision to hold a special repo to infuse Rs 20,000 crore in the system.

J & K | Chhattisgarh | Delhi | MP |
Mizoram | Rajasthan

Featured Blog

Rajdeep Sardesai

26/11: Terror comes precariously close

Featured Slideshows

New Delhi: Union Finance Minister P Chidambaram is hoping that the confidence will be restored in the Indian markets after the Sensex opened in the green on Tuesday following positive global cues.

"I hope the same sense of optimism and confidence (visible elsewhere) will be visible in the Indian markets too," he said.

The Sensex opened more than 500 points higher on Tuesday after closing at 11,332.20, a rise of 804.38 points on Monday.

Addressing the media for the second day running, Chidambaram said he welcomed the Reserve Bank of India's decision to hold a special repo to infuse Rs 20,000 crore in the system.

The RBI announced measures to infuse Rs 20,000 crore through short-term lending route for the mutual fund industry to help it overcome redemption pressure.

RBI has made a special provision of lending short-term (14 days) loans to banks at the annual rate of interest of nine per cent to help the funds meet their redemption obligations.

The apex association of banks and the mutual funds will jointly fix the appropriate rate after due consultations at which banks will lend to fund houses like UTI MF, SBI MF and ICICI-Prudential MF.

The mutual funds were facing redemption pressure because of increase in withdrawal demand by the depositors in view of financial crisis.

Chidambaram announced that RBI Governor Duvvuri Subbarao will be meeting Prime Minister Manmohan Singh later on Tuesday.

He also lauded the action taken by global central banks on Monday which has succeeded in infusing liquidity into the world financial system.

The stock markets in the US, Europe and Asia, too, are on the upswing.

While the Nikkei in Japan was up by over 13 per cent, Hang Seng in Hong Kong rose by about 4.39 per cent.

The markets in US, too, closed higher on Monday, with NYSE and NASDAQ recording gains of 10.17 per cent and 11.81 per cent respectively.

(With inputs from PTI)