IL&FS default impact on debt funds (2018)

Tue, 12 May 2026 00:00:00 +0000

The IL&FS default of September 2018 marked the most consequential single credit event in the Indian debt mutual fund market in the decade preceding the COVID-19 crisis. When Infrastructure Leasing and Financial Services Limited (IL&FS) and its subsidiaries began defaulting on short-term commercial paper and non-convertible debenture obligations in September 2018, mutual funds holding these instruments suffered immediate net asset value (NAV) write-downs, interbank and capital market credit flowed sharply away from non-banking financial companies (NBFCs), and the Securities and Exchange Board of India was compelled to introduce a suite of emergency and structural regulatory measures. The episode revealed deep weaknesses in credit risk assessment, concentration management, and valuation practices within Indian fixed-income mutual funds and accelerated reforms that reshaped the industry for years.

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IL&FS default impact on debt funds (2018)