SEBI Issues New Rules On Intraday Borrowing By Mutual Funds

The move is aimed at strengthening transparency and risk management in the mutual fund industry. By regulating intraday borrowing, SEBI seeks to ensure smoother fund operations while safeguarding investor interests.

Policy Framework
Mutual funds can now use intraday borrowings only within receivables due on the same day from government, RBI, or clearing corporations. This ensures borrowing remains backed by predictable inflows.

Permitted Usage
SEBI clarified that intraday borrowings may be used for specific purposes such as payment of interest, income distribution cum capital withdrawal payouts to unitholders, and for repurchase or redemption of units.

Governance And Oversight
The borrowing facility must be approved by the board of the asset management company, reinforcing accountability and compliance. This step aligns with SEBI’s broader agenda of strengthening governance in India’s capital markets.

Key Highlights

• SEBI issues circular on intraday borrowing by mutual funds
• Rules effective from April 1, 2026
• Borrowing capped at same-day receivables from govt, RBI, clearing corp
• Usage permitted for payouts, redemptions, and repurchases
• Board approval required for borrowing facility

Sources: SEBI circular, regulatory updates