Debt funds have been under fire for the last few months for holding poor quality portfolios and doing gymnastics with investor money by entering into complicated bilateral arrangements with borrowers that got a higher return, but introduced very high risk to schemes that retail investors thought were safe. The story of encouraging retail investors to use debt funds instead of fixed deposits (FDs) went out of the window in the last 12 months. One part of the problem was not created by fund houses but by credit rating agencies that have been accused of being ‘flexible’ with their ratings and when pushed for accountability, have called them an ‘opinion’, especially when high rated debt paper imploded. The capital market regulator has oversight over these agencies and in a 13 June 2019 circular (you can read it here) has taken a big step forward in getting these agencies to be responsible for their ratings going forward.