Debt mutual funds’ exposure to non-banking financial companies (NBFC) has come down by `42,000 crore since the liquidity crises began in July last year, and currently stands at Rs 2.24 lakh crore.
The latest report by Care Ratings on mutual funds said the percentage share of funds deployed by mutual funds in commercial papers (CPs) of NBFCs in May 2019 was at 8.08% and amount held was `1.18 lakh crore.
“Overall exposure of MFs to NBFCs stood at `2.24 lakh crore in May, a drop of `42,000 crore since July 2018, when the liquidity crisis began. While the amount has reduced, the percentage share also dropped from 19.04% in July 2018 to 15.3% in May 2019,” said the report.
The data from Securities and Exchange Board of India show that mutual fund had invested `1.57 lakh crore in CPs of NBFC in July last year.
The crises in NBFC sector started in July 2018 after defaults by Infrastructure Leasing & Financial Services (IL&FS), which led to liquidity crunch in the system.
“The largest share (48.8%) of funds deployed by debt mutual funds are in short-term duration instruments of less than 90 days, followed by 32.4% in long-duration instruments with maturity of 1 year and above, 13.2% funds are parked in instruments with maturity from 182 days to 1 year, while the remaining 5.5% is parked in instruments with maturity from 90 days to 182 days,” says the Care Ratings report.
The data from Sebi show that debt mutual funds invested over `14.64 lakh crore in various debt segments in May 2019. Out of the total amount, `7.14 lakh crore was invested in debt papers maturing in less than 90 days, while `4.75 lakh crore was invested in long-duration instruments of more than 1 year and above.
Corporate debt papers which include floating rate bonds, non-convertible debentures, etc had the second-highest exposure of `4.23 lakh crore. In value terms, investments in this category improved marginally by `3 lakh over April 2019, but fell by `11,000 crore over March 2019. However, on a percentage share basis, investments in corporate debt paper have been on a decline since March 2019.
Commercial papers have the second-highest exposure of `4.31 lakh crore, with a share of 29.47% in May.
Funds deployed in bank certificates of deposit were `1.97 lakh crore with a share of 13.5%. While the amount declined, the percentage share also fell from 15.5% in March. In PSU bonds/debt, the invested amount increased to `1.65 lakh crore, however the share fell to 11.3%.