Sebi eases borrowing norms for all mutual fund schemes

FLEXIBILITY ENHANCED | New rules support smoother settlement-related cash flows

PTI

New Delhi

The Securities and Exchange Board of India (Sebi) on Friday expanded the scope of intraday borrowing by mutual funds, allowing asset management companies (AMCs) to use such facilities for a wider range of cash management needs arising from settlement timing mismatches.

The revised framework, which comes into effect from September 1, follows amendments to the Sebi (Mutual Funds) Regulations, 2026, notified on July 3. Previously, mutual funds could borrow only to meet temporary liquidity needs for redemption and other unitholder payouts, subject to regulatory limits. Under the new framework, Sebi allows intraday borrowings for pay-in regarding investments made by the scheme, mark-to-market (MTM) obligations, foreign exchange settlements, and repayment of existing borrowings, alongside unitholder payouts.

The regulator stated that the move addresses liquidity mismatches caused by differences in market settlement timings. Intraday borrowing can be availed against receivables expected during the day, including guaranteed inflows from the Reserve Bank of India (RBI), clearing corporations, and subscription proceeds. It may also be backed by non-guaranteed receivables, such as maturity proceeds and secondary market settlements from instruments including non-convertible debentures (NCDs), commercial papers (CPs), certificates of deposit (CDs), and over-the-counter (OTC) swaps, provided these are received before the end of the day.

Additionally, AMCs may avail of intraday borrowing beyond these receivables solely to meet redemption and other permitted unitholder payout obligations. Sebi mandates that AMCs ensure all intraday borrowings are repaid by the day's end. Any borrowing that rolls over into an overnight facility must remain within regulatory limits and be used only for permitted purposes. Boards of AMCs and trustees must approve a policy governing these facilities, which must be disclosed on the AMC's website. Furthermore, AMCs must maintain scheme-wise records explaining the underlying liquidity mismatch and the expected source of repayment for every borrowing.

Sebi cancels registration of 12 research analysts 

Sebi has cancelled the registrations of 12 research analysts for failing to pay the mandatory renewal fee required to keep their certificates of registration in force. The action was taken under Sebi's Intermediaries Regulations, 2008, after the entities failed to renew their registrations despite being issued notices. The entities whose registrations have been cancelled include Arjun Lenin, CNI Research Ltd, East Bridge Advisors Pvt Ltd, Kushank Kamal Poddar and R K Global Shares & Securities Ltd.