Sebi likely to limit MFs' exposure to corporate groups to mitigate risks

Norms related to loan-against-shares model can be tweaked to deal with promoters with high levels of pledging

The Securities and Exchange Board of India (Sebi) might limit mutual funds’ (MFs’) exposure to corporate groups to mitigate the risks the MF industry has been facing on its debt exposure since the Infrastructure Leasing & Financial Services (IL&FS) crisis came to light.

The regulator is reviewing various debt schemes' concentrated exposure to a single corporate group, investments in promoter-backed instruments where pledging is high, and lack of adequate number of risk analysts. It is also planning to set a minimum threshold of ‘liquid’ exposure in liquid schemes. 

"In the past few months, there has been a lot of scrutiny on debt