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Nilanjan Dey

Kolkata, July 11

While liquid funds and other products of their ilk reigned supreme for most of the fiscal, a tightening of liquidity – a phenomenon noticed at the close of the year – bank deposits to the fore.

Corporates had pointed out that they saw merit in parking part of their surpluses in FDs that were yielding more than before. The dynamics of the situation, however, are changing yet again, they now add.

Fund sources noted that an influential section of investors has lately modified its stance in favour of the ‘Liquid Plus’ category, thereby incurring lower dividend distribution tax (DDT). This includes corporates, which took to Liquid Plus products in order to continue paying the old DDT of 22.66 per cent.

Liquid Plus, it may be mentioned, generally provided higher returns (roughly 100 basis points) than plain liquid funds over the past few months. This added to their relative attractiveness.

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