The returns on liquid funds have decreased to 4 percent from 7 percent. Mutual funds are related to the FDS. These Mutual funds are used in banks’ FDs. They have some liquidity options and long-term capital. The founder and managing partner, Ravi Rajan, said that the liquid funds are used in mutual funds for banks FDs. The maturity time is 91 days.
These funds are for the business and many other institutional investors. These mutual funds have been fallen from 7 percent to 4 percent these days. These can be able to shift to another category of funds. The returns had decreased because RBI had reduced interest rates. These had been reduced by 6.5 percent in 2019 to 4 percent in 2020.
The repo rate is 3.3 percent in the pandemic. The Head says these of research and Funds India Arun Kumar. There are many other risks in the liquidity funds. Ravi Kumar said that that there are many interset rates and default risks in the liquidity funds. There are many banks like Yes Bank and DHFL bank where these banks are from the liquidity funds.
There are declines in the credit ratings. These virtual forms have some extensions in the other banks. These credit card ratings and fund risk can make loose of the mutual funds. These are below 4 percent in the other investors. These liquidity funds are now parking their money.