SEBI eases intraday borrowing rules for mutual fund AMCs
SEBI just made it easier for mutual funds to manage their cash flow.
Now, asset management companies (AMCs) can use short-term (intraday) borrowings for more than just paying out redemptions or interest: they can cover things like settling trades, handling foreign exchange transactions, and repaying older loans.
Before this, the rules were pretty strict about what these quick loans could be used for.
AMCs may borrow against expected receipts
The changes came after fund houses said the old rules were slowing them down.
With the update, AMCs can also borrow against money they expect to receive soon, even if it's not guaranteed yet.
There's a catch: all intraday borrowings must be paid back by the end of each trading day, and any leftover debt gets treated as a regular loan.
SEBI says only AMCs will bear any risks or costs from these moves, so unit holders' interests stay protected.
The goal? Smoother operations and fewer forced asset sales when markets get bumpy.