Sebi Postpones Mutual Funds' Intraday Borrowing Framework

The Securities and Exchange Board of India (Sebi) has postponed the implementation of guidelines allowing mutual funds to engage in intraday borrowing until July 15, 2026. The delay is due to operational challenges faced by asset management companies. The framework was initially scheduled to take effect on April 1.

The Securities and Exchange Board of India (Sebi) announced on Wednesday its decision to delay the implementation of guidelines that permit mutual funds to engage in intraday borrowing. Originally set to come into force on April 1, the new framework will now be applicable from July 15, 2026.

In a recent circular, Sebi cited the operational challenges faced by asset management companies as the reason for the postponement. The framework mandates that the board of an asset management company, along with its board of trustees, must approve policies related to the use of intraday borrowing facilities. These policies must then be disclosed on the AMC's website.

The intended purpose of intraday borrowings includes repurchasing or redeeming units, making interest payments, and facilitating Income Distribution-cum-Capital Withdrawal payouts to unitholders. The borrowing amount is capped by the 'guaranteed receivables' expected on the same day, which encompasses various proceeds from government securities and related financial transactions.

(With inputs from agencies.)