What makes managing debt funds a challenge for mutual funds industry

In the last couple of decades, the regulator has had to constantly tinker with the guidelines but new problems have cropped up every few years

The strongly worded statement of Securities and Exchange Board of India (Sebi) Chairman Ajay Tyagi asking the mutual fund industry to behave like “investors” and not “bankers” comes at a time when Franklin Templeton Mutual Fund has shut down six of its debt fund schemes, with assets under management of Rs 30,000 crore. More importantly, 300,000 investors have been adversely impacted due to this decision. Last week, Sebi itself was criticised by the Karnataka High Court for the handling of the closure of Franklin’s schemes.

But Tyagi is not the first one to propose new guidelines for debt funds; other