Contact Your Financial Adviser Money Making MC
12
December 2018
 |
NPA
(The Total Investment & Insurance Solutions)
Mutual funds in India can
separate distressed and illiquid assets in their portfolios to deal with any
potential credit crisis, the market regulator said on Wednesday. The Total Investment & Insurance
Solutions
The Securities and Exchange Board of India
(SEBI) was in talks with the industry to allay fears of contagion effect on
mutual funds due to a liquidity crisis faced by the country’s non-banking
finance companies (NBFCs), its chief had said last week. The Total Investment & Insurance Solutions
NBFCs were hit by a credit crunch in
September and October after Infrastructure Leasing and Financial Services
(IL&FS) defaulted on a series of debt obligations spreading panic among
other NBFCs.
“With a segregated portfolio, investors who
may take the hit when the credit event happens shall get the upside of future
recovery, if any,” the regulator said in a statement. The Total Investment & Insurance Solutions
Mutual funds are heavily invested in papers
issued by the so-called shadow banks, and, analysts say, a potential default at
these banks could cripple many of these funds. The Total Investment & Insurance Solutions
“It will help MFs (mutual funds) deal with
the problem of defaults and help schemes function better, especially when one
paper defaults,” said the fixed-income head of a mid-sized mutual fund house,
who declined to be named as it is a regulatory issue. The Total Investment & Insurance Solutions
“It also gives clarity to investors who are
at a loss during event such as IL&FS, and will boost their confidence in
debt funds”.
The regulator also approved a proposal to
allow clubbing of investment limit for foreign portfolio investment on the
basis of common ownership of more than 50 percent or common control. The Total Investment & Insurance
Solutions
However, in the case of properly regulated
public retail funds, investment limits will not be clubbed on the basis of
common control, SEBI said.
The regulator also widened the scope of the
existing offer-for-sale mechanism by making the offer available for
shareholders of companies with market value of 10 billion rupees ($139.08
million) and above.
($1 = 71.9010 Indian rupees)
No comments:
Post a Comment