Finance Minister P Chidambaram on Wednesday asked banks to take certificates of deposit (CDs) of all banks as collateral from mutual funds. “Earlier, some banks were taking CDs issued by top-rated banks as collateral from mutual funds,” a bank chairman, who attended the meeting with Chidambaram on Tuesday, said.
Mutual funds have been facing redemption pressure and were not having access to bank funds due to tight liquidity. To alleviate the liquidity problem of mutual funds and non-bank finance companies (NBFCs), the Reserve Bank of India (RBI) has opened a separate window of Rs 20,000 crore.