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Sebi extends instant cash facility to day-to-day MF programs

Mumbai: The Securities and Exchange Board of India (Sebi) said on Friday that mutual funds can provide instant access facility in overnight programs. This arrangement allows investors to access their money within hours of submitting their redemption request.

The regulator has revised its earlier circular which only allowed liquid funds to offer this facility to investors. Now, mutual funds can offer this arrangement to overnight and liquid plans. Under this facility, investors can instantly withdraw up to 50,000. Currently, cash transfers to the unitholder’s bank account take approximately two days for liquid and overnight plans after the redemption request is submitted.

Sebi also said that unclaimed redemption and dividend monies, which are currently only allowed to be deployed in money market instruments, would also be allowed to be invested in a separate overnight-only mutual fund plan. day, cash and money market.

“Provided that these plans, where unclaimed redemption and dividend amounts are deployed, shall only be the overnight plans/liquid plan/money market mutual funds that are placed in cell A-1 ( relatively low interest rate risk and relatively low credit risk) of the potential risk class matrix,” Sebi said in a circular.

In addition, the regulator has also clarified the rules on the intraday net asset value (NAV) for transactions in units of exchange-traded funds.

He stated that intraday net asset value based on the executed price at which securities representing the underlying index or commodities are bought or sold would apply.

“Industry providing feedback for exchange-traded fund (ETF) share trading by authorized participants/large investors directly with AMCs, ‘Closing NAV of the day’ may not be relevant because these transactions are based on the price at which the securities representing the underlying index or the underlying commodity are bought or sold,” Sebi said.