The mutual fund industry has witnessed an unprecedented liquidity jolt in March, a month affected by the Iran war, recording massive outflows of nearly Rs 2.9 lakh crore highest monthly withdrawal seen in recent years.
The sharp redemption wave not only capped a weak fiscal for debt funds but also raised concerns over liquidity conditions and investor confidence in fixed income product.
Also Read:Rs 1.68 Lakh Crore Gone in 4 Months! What’s Behind Foreign Investors Exit?
As per the data shared by the SBICAPS monthly chartbook, inflows into debt mutual funds collapsed through FY26. The total flows into such schemes plunged by as much as 84% year-on-year basis to just Rs 221.6 billion.
The situation worsened dramatically in March, when the segment saw record outflows that far outpaced inflows into equity and hybrid schemes
In theFinancial Year 2026, the net inflows into mutual fundstotalled Rs 7.4 trillion, down by 9.7% year-on-year basis.
This was owing to an 84% drop in inflows to debt-oriented funds to Rs. 221.6 bn, with equity-oriented funds seeing a shallower drop of 16.9% to Rs 3.5 trn. Hybrid funds showed resistance, rising by 30%, the report said.
"This emptying of the coffers translated into a sliding INR, which fell 11% in the fiscal, pushing the RBI to take drastic measures such as limiting the end-of-day open forex forward positions of banks. To avoid this symptomatic withdrawal from become systematic de-financialisation, a period of stability to calm the nerves of investors would be imperative," the report said.
According to the data from the Association of Mutual Funds in India (AMFI), the liquid funds accounted for the largest share of outflows among debt schemes, with redemptions of Rs 1.35 lakh crore in March.
Among debt fund schemes, overnight funds recorded redemptions of Rs 40,227 crore followed by money market funds with an outflow of Rs 29,207 crore, and low-duration funds, which recorded an outflow of Rs 25,227 crore, it added.
Source: India Latest News, Breaking News Today, Top News Headlines | Times Now
