Debt funds' exposure to banks' certificates of deposit doubles, shows data

Several funds reduce average maturity for schemes in anticipation of interest rates rising.

The exposure of debt mutual fund (MF) schemes to certificates of deposit (CDs) issued by banks has more than doubled in the past year.

Meanwhile, exposure to commercial papers issued by non-banking financial companies (NBFCs) and government securities (G-secs) has increased 17.5 per cent and 7.6 per cent, respectively.

A large part of the investments in G-secs has been made in low-duration bonds on fears of rising interest rates, say industry players.

The exposure to G-secs stood at Rs 2.93 trillion in May, compared with Rs 2.73 trillion a year ago, reveals the Securities and Exchange Board of India data.