(Bloomberg) -- Indian credit risk funds suffered large redemptions in April after Franklin Templeton’s shock decision to wind up $4.1 billion of such plans triggered fresh turbulence in the nation’s debt market.

The category saw a net withdrawals of 192 billion rupees ($2.5 billion) last month, up from outflows of 55.7 billion rupees in March, according to data released Friday by the Association of Mutual Funds in India.

“The Franklin event intensified redemptions in credit funds that we saw in March,” said Vidya Bala, head of research and co-founder at Chennai-based Primeinvestor.in. “There’s a clear flight to safety as flows to gilt funds have jumped and a good chunk would have moved to deposits.”

Equity funds received a net 62.1 billion rupees, the smallest inflow this year, as the world’s most expansive lockdown to curb the spread of coronavirus infections stalled economic activity and disrupted processes at mutual funds and their distributors.

Read more on the Franklin India freeze:

  • Franklin’s $4.1 Billion Fund Halt Shows Lasting Credit Pain
  • A Star Franklin Manager Gets Burned in Market He Helped Create
  • Why Franklin’s Indian Debt Funds Faced a Liquidity Squeeze

To be sure, the redemptions in credit funds tapered after the central bank offered a credit facility to avoid distressed sales of assets by funds. They dropped 81.5% to 7.9 billion rupees on April 30 from a peak of 42.9 billion rupees on April 27, AMFI said earlier this month.

The Reserve Bank of India on April 27 offered as much as 500 billion rupees to banks for lending to mutual funds to contain the fallout of the Franklin’s shock decision.

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