Kotak Mahindra AMC mentioned in a statement that they should have clearly communicated about the credit risks to its investors in certain debt funds which have come under pressure. The statements have come up against the backdrop of the fund house seeking more time for payouts with respect to Fixed Maturity Plans.

The bank stated that as they did not convey as much about the credit risks as they should have mentioned, investors now think that credit risk funds are a kind of ‘free lunch’ that would deliver up to 2 per cent of points extra without exposing themselves to any volatilities.

The bank report said that only 5 per cent of the funds carry credit risk, where some instances have come across resulting in a drop in the net asset value.

The bank report further showed that SEBI has issued show-cause notices to Kotak Mahindra AMC and HDFC MF seeking details about their investments in the debt instruments of Essel Group companies.

The data released by the Association of Mutual Funds in India discloses that FMPs witnessed a net outflow of Rs 17,644 crore in April while net outflow from debt-oriented schemes stood at Rs 18,949.76 crore.