Taking a cue from Amtek Auto episode, SEBI Chief UK Sinha has said today at the Corporate Governance event held today in Mumbai that the market regulator will come out with a regulation to put a cap on sectoral and company specific exposures in debt instruments of mutual funds.
Cafemutual spoke to a few media representatives and fund officials who attended this event to draft this story.
Sinha has cautioned mutual fund houses on debt fund management and advised them to be careful while investing in debt instruments. Expressing his concern over the recent Amtek Auto episode, he said that fund houses should manage their debt portfolio proactively. He asked fund houses not to rely completely on credit rating agencies but instead develop expertise on their own.
Earlier, at the Annual General Board Meeting of AMFI, Sinha has emphasized these points in similar words and put forth an interesting statistics before fund officials on their exposure to downgraded debt securities. He said that the mutual fund industry had an exposure of Rs.4000 crore to downgraded paper as on July 2015 which was went up to Rs.13,000 crore in August 2015.
