Fixed maturity plans of mutual funds face risk of concentration: RBI report

The report also pointed out that the nature of recent FMP defaults had primarily involved debt obligations backed by pledging of shares of group companies

The Reserve Bank of India's financial stability report (FSR) has pointed at the risk of concentrated exposures in fixed maturity plans (FMPs) of mutual funds (MFs) in light of certain FMPs 'defaulting' on the date of their maturity.
 
As part of its analysis of 'risky' investment profiles of FMPs and open-ended debt schemes, the FSR said, "For FMPs, top-five holdings across schemes formed at least 40 per cent of the aggregate corporate debt portfolio, whereas the concentration of both top-five and top-three investments with respect to open-ended debt schemes were lower."
 
The report also pointed out that the