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Informist, Friday, Mar. 13, 2026

 

--SEBI: AMCs' board to approve policy for use of intraday borrowing by MFs 

--SEBI: MFs to use intraday borrow only for repurchase, redemption of units 

--SEBI: MFs to use intraday borrow only for interest payment 

--SEBI: New norms on intraday borrowing by MFs to be effective Apr 1 

 

NEW DELHI – The Securities and Exchange Board of India Friday said the amount of intraday borrowings by mutual funds should not exceed the guaranteed receivables due on the same day from the Reserve Bank of India, the government, and the Clearing Corp. of India. Mutual funds tap into intraday borrowing largely to repay redemptions from liquid or overnight schemes, where the withdrawals are settled earlier in the day than mutual funds can receive the maturity proceeds from money markets.

 

"Intraday borrowings shall be used only for the purpose of repurchase or redemption of units or payment of interest or Income Distribution cum Capital Withdrawal payout to the unitholders," the regulator said, modifying clauses of the SEBI (Mutual Funds) Regulations it notified in January. The regulations are set to take effect from Apr. 1.  

 

Earlier, intraday borrowings by mutual funds for above mentioned purposes were capped at 20% of net assets of a scheme. The duration of such borrowings were capped to six months.

 

SEBI said the limit of 20% is now not applicable for intraday borrowings subject to such conditions as may be specified by the board. "The policy for use of intraday borrowing facility shall be approved by Board of AMC and Board of Trustees and shall be uploaded on the website of AMC."

 

According to the regulator, maturity proceeds from tri-party repo market, reverse repo, government security, Treasury bills, state government bonds, interest on government and state government bonds are the receivables eligible for intraday borrowings. The regulator said sale proceeds of government bonds, Treasury bills, state government bonds, and STRIP or separate trading of registered interest and principal of securities are also eligible for intraday borrowings.  End

 

Reported by J. Navya Sruthi

Edited by Ashish Shirke

 

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