AMFI Seeks Intraday Loans to Buy Securities as Sebi Defers Strengthening of Mutual Fund Borrowing Norms
Sebi to Review Intraday Borrowing Rules for Mutual Funds
India's mutual fund body, the Association of Mutual Funds in India (AMFI), has requested the market regulator, the Securities and Exchange Board of India (Sebi), to reconsider its stance on intraday borrowings from banks for purchasing securities. This move comes after the regulator deferred the implementation of new norms, which were initially set to take effect in April, to July.
According to two people familiar with the development, the AMFI has asked Sebi to allow mutual fund houses to use intraday borrowings from banks to purchase securities. This would enable fund houses to maintain their liquidity and meet their redemption obligations.
The move is seen as a relief for the mutual fund industry, which has been grappling with liquidity issues in recent times. By allowing intraday borrowings, Sebi can help alleviate these concerns and ensure that fund houses can continue to operate smoothly.
Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data
| Mutual Fund Body | Initial Implementation Date | New Implementation Date |
|---|---|---|
| Association of Mutual Funds in India (AMFI) | April | July |
It is worth noting that the new norms were initially set to take effect in April, but Sebi deferred their implementation to July, citing the need for further review. The AMFI's request is seen as a step towards finding a solution that works for both the regulator and the industry.
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