Quick summary
SEBI allows mutual funds to borrow for repurchases, redemptions, or settlements under specific conditions. Intraday borrowings are permitted up to guaranteed receivables from specified government and RBI sources.
Who is affected
Mutual funds, Asset Management Companies (AMCs), Trustee Companies, and Boards of Trustees.
What changes
- Intraday borrowing policy must be approved by AMC and Trustee Boards and uploaded on the AMC's website.
- Intraday borrowings are limited to specified receivables from Government of India, RBI, and Clearing Corporation of India Limited.
- Equity-oriented index funds and ETFs can borrow for Closing Auction Session participation.
Action items
- AMCs must ensure compliance with SEBI (Mutual Funds) Regulations, 2026 and related master circular.
- AMCs to bear costs of intraday borrowing and any losses due to unforeseen events or delays in receiving funds.
Key dates-deadlines
- April 01, 2026: Effective date for new borrowing conditions.
- August 03, 2026: Borrowing by equity-oriented index funds and ETFs for Closing Auction Session starts.
Source reference
SEBI Circular ref HO/(92)2026-IMD-POD-2/I/6961/2026, March 13, 2026.
FAQ
Q: What are the borrowing limits for mutual funds?
A: Borrowings shall not exceed 20% of net assets of a scheme and duration shall not exceed 6 months. However, the 20% limit is not applicable for intraday borrowings.
Q: What receivables are eligible for intraday borrowings?
A:
- Maturity proceeds from TREPS
- Proceeds from Reverse Repo
- Maturity proceeds from G-Sec/ T-bill/ SDL/ STRIPS
- Interest on G-Sec/ SDL
- Sale proceeds of G-Sec/ T-bill/ SDL/ STRIPS