CHENNAI: The mutual funds industry is expecting the Union government to increase its borrowing to Rs 15 lakh crore in FY27 against Rs 14.2 lakh crore in FY26. Speaking to reporters, Amit Modani, Lead-Fixed Income, Shriram Asset Management Company Limited, said, “We are expecting broadly Rs 15 lakh crore of borrowing in FY27 against budgeted Rs 14.2 lakh crore in FY26 and fiscal deficit likely to be nearly 4.2% to 4.3% as the government has been targeting around 4%. But the main concern remains the State Development Loans segment where the states are borrowing hugely.”
He added, “This could be compensated broadly through the Global Inclusion Index of Bloomberg as it is likely to take of 10% of India’s borrowings. If Bloomberg gives Rs 1.5 lakh crore or Rs 2 lakh crore of inflows out of the Rs 15 lakh crore, I think it will take care of 25% of the borrowing. We are waiting for Bloomberg Bond Inclusion.”
Modani, who recently joined Shriram Group after working in Mirae Asset Investment Managers (India), was in Chennai to announce the launch of Shriram AMC’s new fund offer -- Money Market Fund -- which will open on January 19. This is its third fund offer in the Fixed Income segment, except Liquid Fund and Overnight Fund.
The company is aiming to collect Rs 300 crore to Rs 500 crore from the Money Market NFO by the 2026. The company is planning to bring two more NFOs by the year-end and take its overall AUM to Rs 2,000 crore.
The duration of this NFO is 0 to 365 days. The major beneficiaries of this fund are Corporate Treasuries, HNIs, retirees, retail and institutional funds.
Recently South Africa’s largest asset manager Sanlam Group’s subsidiary Sanlam Emerging Markets (Mauritius) Ltd (SEMM) received preferential allotment of 38.89 lakh equity shares in Shriram AMC, raising Rs 105 crore. SEMM now holds a 23% direct stake in India’s first listed AMC and joins as a co-promoter alongside existing promoter Shriram Credit Company Limited (SCCL). As a result, total promoter shareholding has increased from 62.55% to 71.17%.
Money market funds in India grew more than 2.5 times since May 2023, said Modani. “Money market funds are an extension of liquid funds. Liquid funds' maturity cannot go beyond 91 days, whereas money market funds, depending on the interest rate situation, can go up to 365 days of average maturity. This category has grown significantly from Rs 1.10 lakh crore in 2023 to over Rs 3.5 lakh crore as per AMFI numbers, covering nearly 18% of the total debt market,” he said. This category has been giving a return of more than 50 bps compared to liquid funds, he added.