CDs' share in debt fund portfolio surges ahead of g-sec

Bank certificates of deposit became the largest holding in debt mutual funds in FY26, overtaking government securities as taxation changes shifted investor preference towards shorter-duration schemes

Bank certificates of deposit (CDs) have emerged as the largest holding in debt mutual fund portfolios, overtaking government securities (G-secs), data from Sebi’s annual reports show.

 

The share of CDs rose to 25 per cent in March 2026 from 15.9 per cent in March 2024, while the share of G-secs fell to 14 per cent from 21.7 per cent during the same period. Corporate debt also saw its share rise to 17 per cent from 15.2 per cent.

 

The shift comes after changes in debt fund taxation, which have reduced investor interest in longer-horizon schemes that typically invest in government securities. Short-horizon schemes have remained relatively unaffected.

 

 

The trend is also reflected in flows. Money market funds attracted ₹59,478 crore in 2025-26, the highest among debt categories, while gilt funds saw outflows of ₹7,799 crore.

 

Overall, debt scheme assets rose 6.7 per cent to ₹24.34 trillion during 2025-26. 

Shifting sands
Instrument	Mar 31, 2024 (%)	Mar 31, 2026 (%)
Government Securities	22	14
Bank Certificates of Deposit	16	25
Corporate Debt (incl. Floating Rate Bonds, NCDs and Others)	15	17
Commercial Paper	14	14
PSU Bonds / Debt	13	9
CBLO*	10	11
Treasury Bills	6	6
Others	4	4

Source: SEBI Annual Reports  *Collateralized Borrowing and Lending Obligation