Mutual funds’ (MFs’) exposure to non-banking financial companies (NBFCs), through short-term commercial papers (CPs), has risen three times since 2016. And around 41 per cent (median) of these papers are due for refinancing in the current fiscal year, said Credit Suisse in a report.
Given the high exposure and the current uncertainty, MFs may be unwilling to fully refinance the exposure, added the report. The brokerage noted that the share of non-banking sources of funds for NBFCs has grown to 74 per cent, as of March 2018, as interest rates in the market was at multi-year lows. ...
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