Sebi to provide clarity to MFs over treatment of corporate defaults

The Securities and Exchange Board of India (Sebi) will soon issue a clarification to mutual funds (MFs) over the treatment of corporate defaults, particularly because of the stoppage of economic activity, after the fund houses approached the regulator in this regard.  

The move comes in the wake of rising redemption pressure, lack of activity in the bond market and fears of non-payment of dues by corporate houses because of the shutdown in business activity. Some players have highlighted that they have had to borrow or liquidate high-quality paper — raising concentration risk — to meet the redemption pressure.

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