The Reserve Bank on Tuesday decided to inject Rs 20,000 crore through short-term lending route to help mutual funds meet their liquidity needs and overcome redemption pressure.
"RBI has decided to conduct a special 14-day repo at 9 per cent per annum for Rs 20,000 crore today with a view to enabling banks to meet the liquidity requirement of mutual funds," the central bank said in a release.
The decision will help the mutual fund industry to meet redemption pressure following the credit crisis in the financial sector.
Meanwhile, Finance Minister P Chidambaram, while welcoming the decision by the RBI, said it was taken in view of the liquidity stress being faced by some mutual funds.
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