Sebi may pare exposure of debt MFs to NBFCs, HFCs to limit credit risks

The Securities and Exchange Board of India (Sebi) may cut the overall exposure of debt mutual funds (MFs) to non-banking financial companies (NBFCs) and housing finance companies (HFCs). This will ensure diversification and limit the credit risks taken by the

industry. According to the current norms, debt schemes of MFs have to limit their exposure to any particular sector to 25 per cent of the net asset value (NAV) of the plan.

The 25 per cent limit for the financial services sector is mostly utilised for buying debt papers issued by NBFCs. There is an additional limit of 15 per cent for