SEBI proposes allowing mutual funds to borrow intraday for operations
SEBI is looking to update the rules around how mutual funds borrow money during the day.
Right now, funds mostly borrow just to pay out investors who want their money back, but SEBI's new plan would let them borrow for other routine needs too, like handling currency trades or settling payments.
The goal? Smoother operations and better liquidity.
SEBI seeks feedback until June 3
With these updates, funds could borrow even if they don't have incoming cash lined up, as long as they pay it back before the day ends.
If they need to hold onto the loan longer, there's a cap: only up to 20% of the fund's size.
SEBI also insists that any costs from borrowing should be covered by asset managers, so investors aren't hit with extra fees.
Public feedback on these changes is open until June 3, 2026.