Mumbai: The Association of Mutual Funds in India (Amfi) mentioned on Monday normalcy has returned in debt markets and mutual funds if one goes by the inflows into debt schemes for the month of May.

Net flows in debt mutual fund schemes in May have greater than double to Rs 94,224.29 crore from Rs 43,431.55 crore final month, the business physique mentioned on social networking website Twitter.

“Thanks to the measures taken by the Sebi, RBI and Finance Ministry, normalcy has returned in debt markets and mutual funds,” Amfi mentioned in a tweet.

Industry experts agreed that there was some slowdown in the outflows in credit score threat funds in the second half of May however mentioned it was prudent to wait for particulars of the data on inflows to attract a conclusion.

“One will have to see the breakdown on where the flows have come in. In the second half of May, credit risk funds saw a slowdown in outflows. That said, we need to see granular data,” mentioned Kaustubh Belapurkar, director supervisor, analysis, Morningstar India.

“As far as the confidence is concerned, it was dented in certain categories such as credit risk funds. In the banking, PSU, short-term funds, corporate funds, one may have seen flows coming in,” he added.

In the aftermath of Franklin Templeton disaster, traders’ confidence in the debt market had seen a steep erosion. While there could also be inflows in debt schemes, a couple of argued they could be extra in direction of conservative choices.

“The drying up of the corporate debt market and the Franklin event scared investors. People pulled out from debt schemes across the board in April. Even from those with limited risk,” mentioned Dhirendra Kumar, CEO of Value Research

“It’s a churn happening now, and of course, people are getting more conservative. They have put more put in money in liquid and overnight funds,” Kumar added.

On April 23, Franklin Templeton Mutual Fund had mentioned it will wind up six schemes – Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund and Franklin India Income Opportunities Fund – citing extreme illiquidity and redemption pressures attributable to the COVID-19 pandemic.

On May 20, The Securities and Exchange Board of India (Sebi) allowed itemizing of mutual fund models of the schemes which can be in the method of winding up on the inventory exchanges with fast impact.

This transfer will permit Franklin Templeton Mutual Fund to record their models for these traders who want to exit.

Also, Sebi allowed mutual funds to speculate an extra 15 per cent of AUM in G-Secs & T-Bills in company bonds, banking & PSU and credit score threat funds. G-Secs & T-Bills are thought of to be one of many safer and extra liquid types of instrument.

Earlier in May, the Reserve Bank of India (RBI) introduced a particular liquidity window of Rs 50,000 crore for mutual funds, in view of the doable redemption stress that the mutual fund business could face after the abrupt winding up of six debt schemes of Franklin Templeton Mutual Fund.

Under the scheme, the RBI will conduct repo operations of 90-day tenor at a set repo fee of 4.40 per cent for banks.