The liquidity crunch can increase due to high demand of cash for Dussera and the auction of government securities worth Rs 17,000-crore. The banks have already cut the lending and MFs are interested to access overnight funds from RBI like the other banks. 

Various funds houses also discussed the situation and met with the deputy governors of the Reserve Bank.

A CEO of a leading fund house said that fund houses should be allowed to raise money through repo transactions with banks and financial institutions. 

He also demanded the rapo deal with the apex bank. It can help them to meet their sudden and short term money needs. It is to be noted that the MFs have currently no access to RBI repo but some MFs have started credit lines with the banks. 

It can allow them to borrow a maximum of 20% of the assets under management. Credit lines are actually the one day loans taken from banks to meet the redemption pressure.

 It is not economical for MFs to borrow at prevailing rates to meet withdrawals. 

The cash problem can improve after the issuance of oil bonds in post mid-October. These bonds would be sold to RBI to issues cash and government would spend the cash to address its requirements.