MFs' risk aversion towards NBFCs continues, exposure falls to 19% in March

The overall sectoral exposure to NBFCs, including housing finance companies, fell to 19% in March 2020

Debt mutual funds (MFs) have further pruned their exposure to the non-banking financial company (NBFC) space in March. 

The overall sectoral exposure to NBFCs, including housing finance companies (HFCs), fell to 19 per cent in March 2020. 

In December 2018, MFs had fully utilised the 30 per cent sectoral limit prescribed by market regulator Sebi. Since then, their exposure has only gone down, with the trigger being the IL&FS default in September 2018 (see chart 1). 

On an overall basis, the MF exposure to the NBFC sector stood at Rs 2.3 trillion in March 2020, down 20 per cent since September 2019 and 44 per cent since August 2018. Samie Modak