Nippon Fund is heavily invested into Morgan Credits, the investment company owned by Rana Kapoor and family. Now Morgan Credits has been downgraded to the lowest speculative grade by CARE. Total debt to the tune of Rs.106 crore of Morgan Credits has been downgraded from BB to D.

The downgrade happened after CARE raised doubts about the ability of Morgan Credits to repay the debt due to stretched liquidity conditions. Rana Kapoor is currently under judicial custody over money laundering charges. This could create a problem for Nippon Mutual Fund as 4 of its schemes have an exposure to bonds issued by Morgan Credit.