Securities and Exchange Board of India : more stringent regulations to govern the management of mutual funds
According to the new SEBI regulations:
Note: One of the new regulations introduced by SEBI is to increase the exit load on short-term investments in liquid mutual funds to discourage sudden demands for redemption. This could possibly hinder fund flow into the bond market, which in India is already quite undeveloped when compared to the rest of the world.
- Liquid mutual fund schemes will have to invest at least 20% of their funds in liquid assets like government securities.
- They will be barred from investing more than 20% of their total assets in any one sector (the current cap is 25%)
- To sectors like housing finance, the limit is down to 10%.
- SEBI has required that assets of mutual funds be valued on a mark-to-market basis in order to better reflect the value of their investments.
Note: One of the new regulations introduced by SEBI is to increase the exit load on short-term investments in liquid mutual funds to discourage sudden demands for redemption. This could possibly hinder fund flow into the bond market, which in India is already quite undeveloped when compared to the rest of the world.
