Overall exposure of debt mutual funds to NBFCs below 10%: CARE Ratings

The overall exposure of debt mutual funds (MFs) to NBFC papers stood at Rs 1.6 trillion in February 2021. The percent-age share declined from 19 per cent in July 2018 to 9.7 per cent in February 2021, according to CARE Ratings.

The percentage share of funds deployed by MFs in commercial papers issued by shadow banks in February 2021 stood at 4.3 per cent of debt AUMs, compared with 9.5 per cent in September 2018. 

The amount held fell to Rs 0.72 trillion, compared with Rs 1.26 trillion in September 2018. This level was last seen in January 2020 (Rs 0.73 trillion). The percentage share of funds deployed by MFs in corporate debt paper of NBFCs in February 2021 stood at 5.4 per cent of debt AUMs, against 7.5 per cent in September 2018. The amount held stayed flat at Rs 0.9 trillion.

Fund managers’ confidence in the NBFC sector has taken a beating due to the IL&FS crisis in 2018 and later defaults by firms, such as DHFL and Altico Capital.