ilfs fiasco has shown what kind of regulatory regime is needed to monitor large institutions and prevent recurrence of anything similar in future amandeep chopra group president head of fixed income uti amc ltd tells et wealthit has been a year since the ilfs fiasco what learnings have debt funds drawn from these credit eventsone of the key learnings has been around the credit opinion built relying on external agencies clearly the extent of reliance and sanctity of those opinions have been brought under scanner this is a lesson not just for debt funds but the broader financial markets and the regulatory regime there is a fair amount of review of current processes be it regarding the working of rating agencies or the auditorswhich lenders and investors have relied upon it has also shown what kind of prudent regulatory regime is needed to monitor such large institutions and prevent its recurrencewhat is your assessment of the evolving credit scenariothe credit situation has to be viewed in two parts the first is clearly driven by the collapse in ilfs which was once a aaa rated entity and suddenly fell to a drating this was very unusual and had never happened before at the first stage such a significant default not only shook the confidence of the market but it brought a substantial contagion across many other entitiesthose which had a larger percentage of wholesale lending on the assets and some degree of asset liability mismatch this was the first stage of the crisis which is more or less identified now and contained within the financial sector companiesthe second part of the crisis is driven by the macros a large number of entities which had easy access to credit are now facing a challenge because the lenders themselves are shrinking the balance sheet this is where the events are unfolding if the economic growth continues to be soft and access to credit continues to be strained then the second round of impact could be felt on small to medium enterprises and nonfinancial sector companieshow are you dealing with nbfc debt given the bad shape these are ina large number of entities are not getting any funding from the market everyone is keen to focus largely on wellknown highly rated groups or government entities our sense is that as resolution happens in some of these cases the liquidity situation will begin to normalise earlier large part of the credit modelling revolved around financial results as signed off by auditors these elements need to be strengthened so that there is fair amount of credibility and reliability we will also have to build certain stress tests into our credit evaluation modelsthe regulator has introduced norms to tackle the ongoing problems are these enough to restore trust in debt fundsthis is not a onetime exercise actions are being taken by the regulator to tighten the rating standards the institute of chartered accountants of india icai which supervises the auditors also needs to lay down stricter