Liquid funds category or cash plans saw its assets under management falling by a whopping Rs 1.25 lakh crore in September over August, according to data on Value Research.
The industry also witnessed the highest outflows from the liquid fund category last month.
The AUM of liquid schemes stood at Rs 4.5 lakh crore in September, compared to Rs 5.7 lakh crore in August.
Going by the data on AMFI, outflows from liquid funds alone totalled Rs 2.11 lakh crore. Liquid funds or money market segment invests in cash assets such as treasury bills, certificates of deposit and commercial paper for a shorter horizon.
Fears of a liquidity crunch following the IL&FS crisis hit the mutual fund industry in September. Cash plans or liquid funds were the worst hit.
Retail investors invest their short-term cash surplus in liquid funds to earn more than what they do from a savings account. Corporates use liquid funds to earn anything more than the zero interest in their current accounts.
Most fund managers said industry faced huge redemption pressure in September after liquidity in the banking system.
The liquidity crunch was largely attributed to the advance tax payments coupled with default in payments by IL&FS.
NS Venkatesh, Chief Executive Officer at AMFI said liquid fund flows will start coming back once the market stabilises.
According to AUM data from MF factsheet, the worst hit was Reliance Liquid Fund that witnessed a fall of 23.6 percent or Rs 12,127 in its AUM to Rs 39,358.64 crore in September. While AUM of UTI Liquid Cash Regular plan fell 26.5 percent to Rs 33,476 crore in September, a fall of Rs 12,061 over August.
With a fall of 20 percent or Rs 11,525, AUM of ICICI Prudential Liquid Fund stood at Rs 47,684 in September, while that of Tata Liquid Fund fell 40 percent or by Rs 9,824 to Rs 14,634 in September.
The least hit was Aditya Birla Sun Life Liquid Fund that saw its AUM falling 16 percent or Rs 9,478 fall in September to Rs 49,621.