Besides lending against securities held by MFs, banks have been allowed by the RBI to do outright purchase of more than 25 per cent of Hold Till Maturity (HTM) securities in mutual funds portfolios in the absence of liquidity in the secondary market

Unlike 2008 and 2013, the Covid-19 is not a financial crisis yet, but it could become one if there is a chain reaction of defaults in the corporate sector

With US-based Franklin Templeton  Mutual Fund closing its six credit fund schemes effective from April 23, 2020, liquidity shortage in the Indian capital markets has become evident

Franklin Templeton: The fund house has not given any clear indication about the possible timeline within which it will liquidate all its investments and return investors' money

Coronavirus impact: Franklin Templeton's decision to close six funds comes as liquidity dries up in the Indian financial system. Chidambaram said that the closure of the funds was of grave concern

'There is wrong perception in the market that credit risk funds only invest in high-yield low credit quality papers. Almost 20-30% of the portfolio comprises AAA-rated papers and cash, while 30-50 per cent is invested in AA and AA+ assets'

With investors withdrawing money to meet expenses and minimising losses during the coronavirus crisis, industry's listed  players HDFC Asset Management Company and Nippon Life India Asset Management saw their stocks tumbling in a weak market

Franklin Templeton Mutual Fund has cited redemption pressure and lack of liquidity in bond markets for shutting of schemes