The debt market has been witnessing trouble since September 2018. After the IL&FS default, the debt fund industry has been facing a credibility issue. “Almost 20% of debt funds assets were invested in non-banking financial company’s (NBFC) short-term papers and suddenly, the entire portfolio holdings of fixed income mutual funds have come under scrutiny of investors," said Raghvendra Nath, founder, Ladderup Wealth Management.
The cascading effect of the IL&FS crisis was seen in NBFCs and housing finance companies. “Because of tight liquidity, it took a toll on the overall credit system owing to a surge in the cost of funding," said Dinesh Rohira, CEO, 5nance.com.
