te Do you invest in mutual funds? Important to know this Sebi decision | Zee Business

Do you invest in mutual funds? Important to know this Sebi decision

In a major breather for mutual funds, markets regulator Sebi has eased compliance norms for investment in unlisted non-convertible debentures (NCDs).

Do you invest in mutual funds? Important to know this Sebi decision
Now, the regulator has extended the timeline by 6 months. Reuters photo.

In a major breather for mutual funds, markets regulator Sebi has eased compliance norms for investment in unlisted non-convertible debentures (NCDs). The markets regulator has extended the deadline by six months for mutual funds to comply with the highest limits of investment in unlisted NCDs. At the same time, the regulator has also eased compliance norms with regards to grandfathering of the existing unlisted NCDs, the Securities and Exchange Board of India (Sebi) said in a circular.

Mutual funds were required to comply with the highest investment limit of 15 per cent and 10 per cent in unlisted NCDs by March 31 and June 30, respectively. Now, mutual funds will not be forced to stress-sell these existing unlisted NCDs.

New norms: Explained

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- Under the norms, mutual funds need not to invest in unlisted debt instruments including commercial papers other than the government and money market instruments as well as derivative products such as interest rate futures (IRF), which are used for hedging by them.

- These norms are aimed at enhancing the transparency and disclosure for investment in debt and money market instruments by mutual funds.

- However, mutual fund schemes have been allowed to invest in unlisted NCDs not exceeding 10 per cent of the debt portfolio of the scheme subject to the condition that such unlisted NCDs have a simple structure.

- Now, the regulator has extended the timeline by 6 months for compliance with the highest investment limit of 15 per cent in unlisted NCDs by September 30, and 10 per cent by December 31.

The regulator in October allowed existing investments of mutual fund schemes in unlisted debt instruments, including NCDs, to be grandfathered till maturity date of such instruments.

Written By: Prashant V. Singh
Edited By: Harish Dugh
Updated: Wed, Apr 29, 2020
07:11 pm
ZeeBiz WebDesk
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