Sebi raises cash investment limit in mutual funds from Rs20,000 to Rs50,000

The Securities and Exchange Board of India (Sebi ) has announced an increase in the limit of cash transactions in mutual funds from Rs20,000 to Rs50,000 per investor, per mutual fund, per financial year, subject to compliance with applicable Acts, Rules and Regulations.

At present, cash transactions in mutual funds are allowed to the extent of Rs20,000 per investor, per mutual fund, per financial year.

However, considering that liquid schemes have emerged as a distinct category of mutual fund scheme having features similar to that offered by money market mutual fund (MMMF) schemes, Sebi said the guidelines for investment / trading in securities by employees of asset management companies (AMCs) and trustees of mutual funds, along-with MMMF schemes, liquid schemes will be added in list of securities to which the aforesaid guidelines do not apply.

Along-with MMMF schemes, transaction in liquid schemes will also be exempted from being reported by employees to compliance officer within 7 calendar days from the date of transaction.

The aforesaid guidelines, which mention various situations wherein employees of AMC and trustees of mutual funds should not purchase or sell units of any schemes, will now include the term 'liquid scheme' along-side MMMF schemes.

However, repayment in the form of redemptions, dividend, etc with respect to aforementioned investments will continue to be paid only through banking channels, Sebi added.