Sebi asks mutual funds to hone due diligence, playing on debt funds
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Mutual funds have to work on due diligence practices before picking up corporate bonds and should not just rely only on credit ratings given the rising defaults, Sebi chairman Ajay Tyagi said today. "There are instances of defaults on debt portfolio so naturSebi asks mutual funds to hone due diligence, playing on debt funds
Mutual funds have to work on due diligence practices before picking up corporate bonds and should not just rely only on credit ratings given the rising defaults, Sebi chairman Ajay Tyagi said today. "There are instances of defaults on debt portfolio so naturally mutual funds need to strengthen their due diligence and evaluation mechanisms and not only depend on credit rating agencies," Tyagi told an Amfi summit here. The Sebi chief also warned MFs against playing too much on debt funds, given the poor shape of many corporates, also the bad loans in the banking system and the possibility of some of such funds finding their way into the fund houses. "Care should be taken that NPAs do not get shifted to MF portfolio by way of debt transfer," Tyagi warned. The warning from the markets watchdog comes amidst many companies including Amtek Auto, Jindal Steel & Power, Ballarpur Industries, having defaulted on their debt coupon payments in recent past and given the pathetic shape of ... Read more