- This has happened due to the issuance of CPs by NBFCs for funding investments in initial public offerings (IPOs) and shifting long-term to short-term investments as the market expected a hike in interest rates.
- According to the report percentage share of funds deployed by MFs in NBFCs’ CPs stood at 4.4% of debt assets under management and, investments in corporate debt of NBFCs rose by 7.4%.
- While Considering the proportion of commercial paper and corporate debt deployed together in NBFCs increased to 17.2% compared to 14% last year.
- Credit exposure also plays a vital role in that as per the report the credit exposure of banks to NBFCs fluctuated around the Rs 9-trillion-mark for the better part of the year and crossed the Rs 10-trillion threshold in December.
- But now the overall borrowing cost is expected to become expensive as the RBI has raised rates and bond yields have risen in the capital market.
Question:
Q.1 According to a recent report Mutual fund's debt exposure has risen by what percentage for FY2022?a. 15%
b. 14.3%
c. 16%
d. 18%
