Mutual funds continue to shun Indian shadow lenders’ debt despite a liquidity boost from the nation’s central bank and measures from the government to quell investor wariness toward them.
Debt mutual funds spooked by a string of defaults and credit rating downgrades of the non-bank lenders slashed investments in notes from shadow banks to 14% of their total assets in July, the lowest in nearly two years, data from markets regulator show. The funds invested 7.1% of their assets in commercial papers from shadow lenders and 6.9% in bonds last month, the data showed.