Sebi's new norms will ensure uniformity in valuation of high-risk papers

But the issue of how much credit risk different debt fund categories should take remains to be addressed

Continuing with its reforms of debt funds in the wake of the IL&FS defaults and downgrades, the Securities and Exchange Board of India (Sebi) has announced new norms for the valuation of below-investment-grade debt securities. These new norms, say experts, will bring uniformity in how debt funds value such securities. 

Earlier, when rating agencies downgraded a paper to below investment grade, there was no uniformity in how fund houses reacted. “Every fund house took a different level of haircut (or mark down) and on different dates,” says Dwijendra Srivastava, chief investment officer, fixed income, Sundaram Mutual Fund.

Until now, rating