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Enthused by the upswing in the Indian stock market, Finance Minister P Chidambaram today hoped that the buoyancy displayed by the US, European and East-Asian markets will influence the mood here, even as RBI announced measures to inject more liquidity in the mutual fund industry.brbrAfter recording a near 800-point jump yesterday, the BSE benchmark index soared by over 500 points in early trade this morning.nbsp;nbsp;nbsp;nbsp; brbrI hope the same sense of optimism and confidence (visible elsewhere) will be visible in the Indian markets too, he told reporters while referring to the strong performance in the US and European markets last night and impressive opening in East Asian markets this morning.brbrCoinciding with this, 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. brbrRBI 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.brbrThe 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.brbrThe mutual funds were facing redemption pressure because of increase in withdrawal demand by the depositors in view of financial crisis.brbrThe mutual fund industry informed Chidambaram that they would provide certificates of deposits as collateral for borrowings from banks.nbsp;brbrSome mutual funds faced stress on liquidity due to redemption in debt instruments and money market instruments, the minister said that this was brought to the government's notice only last night and welcomed RBI's swift action to address it.brbrThe decision was taken after SEBI Chairman C B Bhave and RBI Deputy Governors met this morning that was followed by a meeting involving key players in the asset managementnbsp;industry.brbrThe mutual fund industry witnessed nearly 3 per cent drop in its assets under management in September. The combined average assets under management (AUM) of the 35 fund houses in the country dropped to Rs 5,29,121.76 crore at the end of September from Rs 5,44,173.96 crore in August.brbrAs part of liquidity infusion exercise, RBI last week, slashed the mandatory cash deposits requirement of banks by 150 basis points to 7.5 per cent to infuse liquidity to the tune of Rs 60,000 crore in the cash-strapped banking system.brbrTo encourage inflow the government widened the External Commercial Borrowing window by including mining and petroleum in the infrastructure sector, thereby enabling them to borrow USD 500 million from the overseas market.nbsp;brbrBesides, the government has set up a high powered committee headed by the Finance Secretary to assess the liquidity situation and suggest means to improve cash flow. The liquidity panel is required to submit its interim report within this week. brstrongbrRBI Governor to meet PM, discuss measures to ease cash woesbr/strongbrRBI Governor D Subbarao is scheduled to meet Prime Minister Manmohan Singh later this evening, Finance Minster P Chidambaram said today. brbrGovernor RBI has returned to Mumbai. He has been requested to go over to Delhi this evening. The Governor is scheduled to meet the PM later this evening, Chidambaram told reporters. brbrThe meeting assumes significance as the Governor will be meeting the Prime Minister to discuss the measures being taken by the central bank to ease the liquidity crisis. Subbarao went to the US to attend the annual meetings of the World Bank and International Monetary Fund (IMF).brbrChidambaram, it may be recalled, had cancelled his visit to the US to tackle the problems caused by the meltdown of global financial markets. The RBI had already reduced the mandatory deposit (CRR) that banks keep with the central bank by 1.5 per cent, unlocking Rs 60,000 crore of funds. brbrThis morning the central bank announced steps to pump in Rs 20,000 crore through the repo route to help the mutual fund industry meet redemption pressure.brbr(With inputs from Agencies)/p Categories: Business<http://forums.investorline.co.in/aggregator/categories/4>, Capital Market <http://forums.investorline.co.in/aggregator/categories/5>, Corporate News <http://forums.investorline.co.in/aggregator/categories/11>, Economy<http://forums.investorline.co.in/aggregator/categories/12>, India <http://forums.investorline.co.in/aggregator/categories/43>, Industry<http://forums.investorline.co.in/aggregator/categories/20>, Inflation <http://forums.investorline.co.in/aggregator/categories/21>, International Business <http://forums.investorline.co.in/aggregator/categories/23>, International News <http://forums.investorline.co.in/aggregator/categories/24>, USA<http://forums.investorline.co.in/aggregator/categories/46> -- Visit site at – http://investorline.co.in/ Learning Center- http://learning.investorline.co.in/ Mutual funds - http://mutualfunds.investorline.co.in/ Life Insurance - http://insurance.investorline.co.in/ Investor Forums- http://forums.investorline.co.in/ Iwebs Open Source Web Publishing Platform - http://webs.investorline.co.in/iwebs/ Join SMS Updates - http://labs.google.co.in/smschannels/subscribe/Investorline-News --~--~---------~--~----~------------~-------~--~----~ Get latest market updates & search internet right from your browser-download our toolbar here- http://investorline.ourtoolbar.com/ Visit our site at – http://investorline.co.in/ Newsroom: http://newsroom.investorline.co.in/ Learning Center- http://learning.investorline.co.in/ Mutual funds - http://mutualfunds.investorline.co.in/ Life Insurance - http://insurance.investorline.co.in/ Investor Journal - http://research.investorline.co.in/ Newscatcher- http://catcher.investorline.co.in/ Interested in Financial Planning-Let us Contact you- http://spreadsheets.google.com/viewform?key=pb_z4f1_zGMg4iBBFT3-SWQ&email=true If you like the site then promote it here- https://www.freetellafriend.com/tell/?url=http://investorline.co.in/blogs/news Create your own free blog on- http://investorline.co.in/blogger Visit this group at http://groups.google.com/group/india-investor -~----------~----~----~----~------~----~------~--~---
