In spite of the RBI's missive advising Banks to reduce their exposure to Mutual Funds, banks pumped in an additional Rs.6261 crore in these instruments in the week upto November 6. The total outstanding investment by banks in MFs stands at Rs.160483 crore compared with Rs.36781 crore on March 27.
Due to lower credit off take, banks are left with only another option to park surplus funds. But bond yields have been volatile, in the last quarter, posing mark-to-market risks.
While large banks were planning to cap their MF exposure at 20% of total investments, smaller banks were limiting such investments to Rs.1000 crore.
Source: http://www.business-standard.com/india/news/despite-advisory-banks-park-fundsmfs/377135/
DESPITE ADVISORY, BANKS PARK FUNDS WITH MUTUAL FUNDS
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