The Securities and Exchange Board of India (Sebi) asked Indian mutual fund (MF) houses to strengthen their due diligence and valuation mechanism for debt funds and not depend only on credit rating agencies. Sebi Chairman Ajay Tyagi, speaking at the Association of Mutual Funds in India’s (Amfi) first mutual fund summit on Thursday, also added that more needs to be done to attract investors from beyond top 15 (B15) cities.
Tyagi, in his key note address, said, “There are instances of defaults on debt portfolio, so mutual funds should not only depend on credit rating agencies and need to have their own valuation mechanism. I would also say that care should be taken that non-performing assets (NPA) do not get shifted to mutual fund portfolios by the way of debt transfer and fund managers need to be watchful and responsive.”
He also added that benefits of the booming capital market has to reach people in far-flung areas, through advertisements informing them on the risks involved with mutual funds.