India’s central bank is weighing opening a new credit facility for banks aimed at boosting their lending to mutual funds, which have been hit by a flood of redemptions, according to people with knowledge of the matter.
The Reserve Bank of India and the finance ministry are in favor of a proposal from the industry regulator to open a cash window that fund houses can tap via their banks, the people said, asking not to be identified as the discussions are private. Other measures to ease a growing cash crunch are being discussed and a final decision is expected soon, one of the people said.
