More Stories

Informist, Wednesday, May 13, 2026

--SEBI mulls utilisation of intraday borrowing lines by mutual funds 
 

NEW DELHI – The Securities and Exchange Board of India proposed to recognise intraday borrowing facilities utilised by mutual funds as a cash management tool, while considering necessary safeguards and uniform practices. It sought public comments on the same by Jun. 3.

In a consultation paper issued Wednesday, SEBI proposed whether mutual funds should be allowed to use intraday borrowings for purposes beyond redemptions, including borrowings not limited to guaranteed receivables and amounts exceeding receivables, provided asset management companies comply with overnight borrowing norms.

Further, the regulator said that intraday borrowings are needed due to timing mismatches between scheme outflows and receivables from different sources. If mutual funds do not use such borrowings, the same would impact fund management flexibility and returns of the scheme, the paper said. "Since the pay-in has to be made before specific cut-off timings, the scheme receivables received later in the evening cannot be deployed effectively, which may impact the returns of the scheme," the regulator said. "The fund manager's decision-making would be impacted due to inability to make buy and sell trades during the same day."

Asset management companies may be allowed to avail intraday borrowings for reasons such as differences in pay-in and pay-out timing across asset classes, early morning redemptions, foreign exchange settlements, borrowing payments, and mark-to-market of derivative positions, the regulator said.

Citing an example, the regulator said a scheme with INR 100 crore (INR 1 billion) assets under management and nil receivables may borrow INR 30 crore (INR 300 million) intraday for redemptions, but must sell at least INR 10 crore (INR 100 million) of securities on T+0 settlement (same-day settlement) to keep borrowings within 20% of AUM. Any other suggestions on the proposal may be provided with rationale, SEBI said.

SEBI further said such intraday borrowings may exceed receivables, whether guaranteed or not. However, asset management companies must ensure borrowings are repaid by the end of the day. If any intraday borrowing is converted to overnight borrowing, it must stay within regulatory limits and be only for purposes allowed under SEBI's mutual fund regulations. "In line with existing regulatory guidelines, any charge or cost levied for availing intraday borrowings, if any, shall be borne by the AMCs," the regulatory body said. End

Reported by Vaishali Tyagi

Edited by Tanima Banerjee

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2026. All rights reserved.