Fund houses paring exposure to NBFCs, says CARE

Overall exposure of mutual funds to the beleaguered NBFC segment has reduced in January, CARE Rating said.

According to a study by CARE Rating, the exposure to NBFCs stood at ₹2.34 lakh crore in January 2019, a drop of ₹31,000 crore since July 2018. “While the amount has reduced, the percentage share also dropped from 19 per cent in July-2018, to 16.4 per cent in January 2019,” it added.

After the liquidity crisis triggered in the NBFC space, MFs reduced almost 1/4th of their investments from commercial papers (CPs). The percentage share of funds deployed in CPs of NBFCs was at the lowest in January, since the past 11 months, CARE said. As of January 2019, debt MFs held ₹1.16 lakh crore funds in CPs of NBFCs.

Though mutual funds have pared their exposure in CPs, it seems, they remain positive on corporate debt paper. The deployment of funds in corporate debt paper has been rising from October 2018, reaching ₹1.18 lakh crore in January 2019, the study said.

The MF industry grew to ₹23.37 lakh crore in January 2019, registering a growth of 9.4 per cent over March 2018, which translates to an asset base addition of ₹2.01 lakh crore in FY19 (up to January 2019).

However, this growth rate of 9.4 per cent is much lower than the growth of 28 per cent witnessed in January 2018 over March 2017, the report said.

Along with the growth in AUMs, the industry has also witnessed growth in number of folios. As of January 2019, Indian MF industry had a total of 809 lakh folios, of which nearly 76 per cent were of equity/growth-oriented schemes, it further said.

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