Industry body Amfi on Thursday said mutual fund houses have been able to manage day-to-day redemptions through orderly liquidation of portfolios due to acceptability of underlying securities in the secondary market and measures taken by regulator Sebi to deepen the debt market.
Amfi said steps taken by Sebi to deepen bond markets over the years have allowed normal functioning of markets and growth of debt mutual funds.
Sebi, over the years, has taken a number of steps to deepen the Indian securities market and bring it at par with global markets.
The Securities and Exchange Board of India (Sebi) in October 2019 in consultation with the Association of Mutual Funds in India (Amfi) and after the deliberation at the mutual fund advisory committee (MFAC) proposed calibrated reduction in limits for investment in unlisted securities in mutual fund schemes.
Further, listing guidelines were suitably modified to facilitate listing for instruments like commercial paper which hitherto were always unlisted. In addition, issuers were encouraged to seek listing of securities on exchanges for prior issuances.
"All these steps were taken to ensure that every market participant had access to relevant information which will enable fair price discovery and improve secondary market liquidity," said Amfi Chief Executive Officer N S Venkatesh.
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"Measures taken by Sebi over the years including one in October 19 have deepened the debt market," he added.
He further said mutual funds have carried out business as usual, including meeting redemptions, in current challenging times as markets are open and functioning.
Global experience suggests that listing on exchanges create better dissemination of information resulting in finer price discovery and improved liquidity in secondary markets.
"Amfi will continue to work with Sebi to deepen debt markets to improve investor protection and participation," Venkatesh added.
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