Mutual Funds’ Cash Levels at 15-Year High in March 2025

Mutual funds in India are now sitting on their highest cash reserves in 15 years, with holdings surging to nearly ₹1.96 lakh crore as of March 2025, as per a news reports. This cautious positioning reflects fund managers’ reluctance to invest aggressively in a market where valuations appear stretched. 

Why are Mutual Fund Managers Increasing Cash in a High-Valuation Market? 

Fund managers are choosing to hold cash rather than invest in expensive equities, waiting for better entry points. This strategy is seen as prudent capital preservation, not necessarily a sign of pessimism. 

Large, Mid, and Small-Cap Equity Mutual Funds All Raising Cash  

Data shows that large-cap schemes held 4.8% in cash by February 2025, the highest since June 2023. Mid-cap schemes pushed their cash allocation to 6.7%, the most since 2020, while small-cap schemes also hit a high not seen since October 2023. 

In absolute terms, mid-cap funds held ₹24,800 crore and small-cap funds ₹22,340 crore in cash, indicating a broad-based rise in liquidity buffers across categories. 

AMCs Take Cautious Calls on Cash Allocation 

Most major asset management companies (AMCs) such as SBI Mutual Fund, ICICI Prudential, and Motilal Oswal have increased cash allocation in early 2025. Parag Parikh Mutual Fund made frequent adjustments, reducing allocation in late 2024 and raising it again in early 2025. 

While some AMCs maintained or even reduced their cash holdings, the broader trend reflects defensive positioning amid limited attractive stock ideas. 

What Does this Mean for SIP Investors and Market Timing? 

Higher cash levels may signal lower short-term returns as funds stay partially uninvested. However, they give fund managers the flexibility to invest when valuations turn more favorable, possibly offering better medium-term returns. 

According to BankBazaar CEO Adhil Shetty, funds with higher cash buffers may be well-positioned to take advantage of any market corrections, while fully invested funds could be more vulnerable in a downturn. 

Choose Funds Based on Risk Appetite and Horizon 

For conservative or tactical investors, funds maintaining elevated cash levels might offer peace of mind. Meanwhile, long-term investors willing to weather volatility can stay with fully invested funds if they believe in the underlying strategy. 

The key lies in aligning fund choices with your personal risk profile, goals, and time horizon, not in chasing short-term performance. 

Conclusion 

The surge in mutual fund cash holdings suggests fund managers are preparing for better buying opportunities ahead. Investors would do well to take a cue, stay disciplined, review portfolios carefully, and prioritise quality and allocation over impulsive moves. 

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing. 

8th Pay Commission: Basic Salary Was Hiked 157% From 6th to 7th Pay Commission

In the last two decades, central government salary structures have changed significantly. The 6th and 7th Pay Commissions revised basic pay, allowances, and pensions. The 8th Pay Commission is expected to take effect from January 1, 2026. Here’s a look at how basic pay changes between 6th and 7th commissions, along with the percentage jump in basic pay. 

6th and 7th Pay Commissions: Salary Revision for Government Employees 

One of the most impactful changes introduced by the 7th Pay Commission in 2016 was the hike in minimum basic salary. Here’s a breakdown: 

6th Pay Commission (2006): 

  • Minimum basic salary: ₹7,000 
  • Fitment factor: Initially 1.74, later increased to 1.86 
  • Introduced running pay bands and consolidated various grades

7th Pay Commission (2016): 

  • Minimum basic salary: ₹18,000 
  • Fitment factor: 2.57 
  • Replaced pay bands with a Pay Matrix, simplifying salary structures

Therefore, the minimum basic salary will increase by 157.14% from the 6th to the 7th Pay Commission.   

6th and 7th Pay Commissions: Allowances and Pension Enhancements 

Both commissions also introduced major updates in allowances and pensions: 

Dearness Allowance (DA): 

  • 6th CPC: Increased from 16% to 22% 
  • 7th CPC: Reached 53% of basic pay as of 2024

Pensions: 

  • 6th CPC: Minimum pension increased to ₹3,500 
  • 7th CPC: Minimum pension hiked to ₹9,000 
  • Fitment factor also applied to pensioners for uniform revision

Other benefits included health insurance for employees and pensioners (introduced in the 7th CPC) and rationalisation of risk and transport allowances. 

Also Read: 8th Pay Commission Calculator: Here’s What Govt Employees’ Salaries Could Look Like at 2.0 Fitment Factor.

What to Expect from the 8th Pay Commission? 

Although this article focuses on the 6th and 7th CPCs, it’s worth noting that the 8th Pay Commission, set to be implemented from January 1, 2026, could further transform pay structures. Early projections suggest: 

  • Minimum basic salary could rise to ₹41,000–₹51,480 per month 
  • Fitment factor expected: 2.28 to 2.86  
  • Estimated salary hikes: 20% to 35%  
  • Pension revisions and enhanced allowances are also on the cards  

The minimum basic salary increase translates to a potential salary hike of up to 186% over the existing basic pay. 

Conclusion 

The shift from the 6th to the 7th Pay Commission marked a 157% increase in the minimum basic pay, from ₹7,000 to ₹18,000, alongside structural reforms in salary matrices, allowances, and pensions. With the 8th Pay Commission on the horizon, central government employees and pensioners can expect another significant financial uplift. However, the final figures depend on the government’s assessment and the officially approved fitment factor. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.