The Securities and Exchange Board of India (SEBI) said it has not issued any advisory to mutual funds against rolling over their current exposure to Indiabulls Housing Finance and Dewan Housing Finance. The clarification issued by the capital markets regulator on Friday comes after some media reports stated that SEBI is seeking details from mutual funds amid concerns over liquidity in the system.

Notably, mutual funds have significant exposure to several housing finance firms and NBFCs as a whole, including through debt securities.

In recent past, stocks of many non-banking financial companies (NBFCs) and housing finance companies have tanked due to the recent crisis in cash-strapped Infrastructure Leasing & Financial Services Ltd (IL&FS) and its subsidiaries that have missed debt repayments, which in turn has triggered fears of liquidity crunch in the system. IL&FS Financial Services defaulted on one of its commercial paper (CP) issuances due for repayment on Monday, which was its third default.

On Thursday, shares of NBFCs and housing finance companies declined as much up to 8.5% on worries over liquidity. While Indiabulls Housing Finance tanked 6% to the end the day on Thursday to Rs 937.20 on the BSE, stocks of DHFL plunged about 5% to close at Rs 290.15.

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Meanwhile, earlier this week, Indiabulls Housing Finance said that rating agencies- ICRA, CARE and Crisil – have reaffirmed the long-term credit rating of the company at ‘AAA’ with stable outlook. Also, the Reserve Bank of India (RBI) has allowed has eased the statutory liquidity ratio (SLR) norms from October in order to induce liquidity into the financial system and ease the pressure over tight liquidity conditions.

At present, IL&FS has over Rs 91,000 crore in debt and needs capital infusion of Rs 3,000 crore and is planning a Rs 4,500-crore rights issue. The crisis in IL&FS came to light when it defaulted on a short-term loan of Rs 1,000 crore from Sidbi on September 4. On the other side, the company’s subsidiary has also defaulted Rs 500 crore dues to the development finance institution.

The central bank is also scheduled to meet with the shareholders of the IL&FS on Friday, while the company’s board will meet on Saturday to discuss fundraising plans. Major shareholder LIC recently assured that it would not let the crisis-hit company collapse.