Mutual Fund Rules: If you are a mutual fund investor, then todays article is made for you. SEBI, the market regulator, has made changes to a crucial regulation concerning mutual funds. The revised regulation allows mutual fund companies to now utilize intraday borrowing for various purposes like settling payments to unitholders, making investments, meeting mark-to-market obligations, foreign exchange settlements, and repaying loans.
However, SEBI has specified that any intraday borrowing must be repaid on the same day to avoid being classified as overnight borrowing, subject to regulatory limits. This amendment will be effective from September 1, expanding the previous scope which only permitted borrowing for temporary cash needs within set boundaries.
The reason behind SEBI’s decision is to aid mutual funds in managing short-term liquidity shortfalls that arise due to differences in market settlement timings. This rule applies to all entities within the mutual fund industry, ensuring that the cost of intraday borrowing is solely borne by the mutual fund company itself, without transferring any of the burden to the schemes or investors.
Moreover, recent data indicates a rise in total assets under management in the mutual fund sector, reaching Rs 82.22 lakh crore by the end of June. Equity schemes saw increased investments amounting to Rs 28,973 crore in June, up from Rs 22,908 crore in May. Notably, there were investments of Rs 38,440 crore in April, Rs 40,450 crore in March, Rs 25,978 crore in February, and Rs 24,028 crore in January.
In the context of increased investment in mutual funds, despite market volatility, equity-oriented mutual fund schemes experienced a 26% surge in investments to Rs 28,973 crore in June. Data released by the Association of Mutual Funds in India (Amfi) revealed total outflows from the mutual fund industry in June stood at Rs 52,949 crore, with withdrawals from bond-based schemes amounting to Rs 1.09 lakh crore. This marked a decrease from the withdrawals of Rs 64,131 crore in May.