Markets regulator Sebi has sought details from mutual funds about their exposure to housing finance companies DHFL and Indiabulls Housing Finance, amid concerns over liquidity in the system, according to sources.
In recent days, shares of Non-Banking Financial Companies (NBFCs) have taken a beating against the backdrop of IL&FS group entity defaulting on its debt obligations, triggering fears of liquidity crunch.
The Securities and Exchange Board of India (Sebi) has sent letters to all mutual funds seeking details about their exposure to DHFL and Indiabulls, regulatory and industry sources said.
Mutual funds have significant exposure to these companies and NBFC companies as a whole.
The sources also said that the regulator has advised mutual funds not to roll over their current exposure in these two companies.
On Thursday, shares of NBFCs and housing finance companies tumbled up to 8.5 per cent on worries over liquidity.
The scrip of DHFL declined nearly 5 per cent to close at Rs 290.15 while that of Indiabulls Housing Finance plunged over 6 per cent to end the day at Rs 937.20 on the BSE.
IL&FS Financial Services, a group company of IL&FS defaulted on one of its commercial paper (CP) issuances due for repayment on Monday. This was the third default by the company.
Earlier in the day, the Reserve Bank allowed banks to dip further into statutory cash reserves in a bid to ease a liquidity squeeze afflicting the nation's money markets.
The move by the central bank follows concerns over tight liquidity conditions and banks' unwillingness to lend to NBFCs.