Markets regulator Sebi on Friday issued guidelines for mutual funds to undertake intraday borrowing arrangements with financial institutions such as banks.
Under the new framework, the board of an asset management company (AMC) as well as the board of trustees will be required to approve a policy governing the use of intraday borrowing facilities.
Further, the AMC will also disclose the approved policy on its website, Sebi said in its circular.
Sebi said intraday borrowings can be used only for specific purposes — repurchase or redemption of units, payment of interest or Income Distribution-cum-Capital Withdrawal (IDCW) payouts to unitholders.
The regulator also stipulated that the borrowing amount cannot exceed the “guaranteed receivables” expected on the same day.
Receivables eligible for such intraday borrowings include maturity proceeds from TREPS (Triparty Repo in Government Securities), proceeds from reverse repo transactions, maturity proceeds from government securities such as G-Secs, Treasury Bills, State Development Loans (SDLs) and STRIPS, interest payments on G-Secs and SDLs, as well as sale proceeds of these securities.
These conditions will apply to intraday borrowings by mutual funds from April 1, 2026, Sebi said.
