Despite some significant reforms that enhance liquidity and impose additional restrictions on portfolios, money market funds are still susceptible to liquidity constraints largely because of attributes like their rounded net asset value (NAV) feature and the low risk tolerance of their investors.
As we move towards the international norm of 90 days for recognition of loan impairment, there may be a temporary increase in crystalisation of NPAs in the banking sector. There is, therefore, a need to bring about improvements in credit administration and management of credit risk.