Debt mutual funds having more government securities will be more liquid Earlier this week, capital markets regulator Securities and Exchange Board of India (Sebi) allowed certain categories of debt funds to invest up to 15% more of their assets in government debt, which is the most liquid form of debt in the Indian debt market.
The move will help mutual funds build up liquidity to face huge redemptions. The facility has been provided to credit risk, corporate debt and banking and PSU debt funds for up to three months from the date of the circular (18 May). Why was this necessary? Open-ended funds allow investors to enter and exit at any time, although many have exit loads.