Coronavirus impact: Many debt schemes turn cash negative in March

Net liabilities rise 3-17%, funds forced to borrow to meet redemption pressure

Debt mutual funds, driven by lack of liquidity in March, borrowed heavily to meet redemptions. As a result, several schemes reported net liabilities of 3-17 per cent of scheme assets at the close of the month.
 

“As permitted by the Securities and Exchange Board of India (Sebi), all mutual funds are allowed to temporarily borrow to meet redemptions, by pledging securities or even through bank lines. This time around, the markets were exceptionally tumultuous at the end of financial year 2020 with the outbreak of Covid-19,” Franklin Templeton MF said in a social media post to explain the borrowing.
 

The