SEBI raises housing finance exposure limit for MFs; allows FIIs to reinvest 50 per cent of debt

The Securities and Exchange Board of India (SEBI) has decided to amend provisions relating to sectoral prudential limits for exposure to housing finance companies in debt oriented mutual fund schemes.

A meeting of the SEBI board presided over by finance minister P Chidambaram today also decided to allow foreign financial institutions (FIIs) to re-invest up to 50 per cent of their debt holdings at the end of the previous calendar year beginning 1 January 2014.

The SEBI board decided to allow mutual funds an additional 10 per cent exposure to the financial services sector, over and above the 30 per cent exposure limit available at present.

This has been done considering the important role played by housing finance companies (HFCs) in fulfilling the social objective of increased home ownership and supporting the economy by creating demand for construction of new homes, SEBI said in a release today.

This facility can be availed by debt oriented mutual fund schemes, subject to the condition that such securities issued by HFCs are rated AA and above and these HFCs are registered with the National Housing Bank (NHB), SEBI said.

However, the total investment in HFCs cannot exceed 30 per cent of the net assets of the scheme.