BENGALURU, May 13 (Reuters) - India's markets regulator on Wednesday proposed to allow mutual funds to use intraday borrowings for purposes beyond investor redemptions and payouts and also deferred the implementation of guidelines on such borrowing to July 15.
Here are the details:
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The Securities and Exchange Board of India plans to expand the scope of intraday borrowing facilities, positioning them as a broader cash management tool for mutual funds
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Intraday borrowing was permitted earlier this year to help asset managers bridge mismatches between redemption payouts and receivables due on the same day
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These guidelines have been deferred after industry raised operational concerns
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The regulator is now considering allowing intraday borrowing for a wider set of uses, including meeting trade settlement obligations, forex transactions, derivative margin requirements, and other liquidity needs
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SEBI also proposes to remove restrictions linking intraday borrowings to guaranteed receivables such as inflows from the government or clearing corporations
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Mutual funds could also temporarily borrow amounts exceeding expected inflows, provided these are repaid by the end of the day - SEBI
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Any borrowing that spills over into overnight positions would be subject to existing regulatory caps, including a limit of 20% of a mutual fund scheme's net assets and a maximum tenure of six months
Reporting by Pranav Kashyap in Bengaluru; Editing by Mrigank Dhaniwala
Source: Reuters