SEBI Board Meeting
The SEBI Board met in Mumbai today and took the following decisions:
1. Review of prudential limits on investments by Mutual Funds
The Board deliberated the proposals relating to review of prudential limits at issuer and sector level and the need to introduce such limits for group level exposure. It considered that review of single issuer, sector level exposure limit and introduction of group level exposure limits for investment in debt instruments would:
1. Mitigate risks arising on account of high levels of exposure in the wake of events pertaining to credit downgrades.
2. Put mutual funds in a better position to handle adverse credit events.
3. Provide mutual fund investors with enhanced diversification benefits.
In light of the above, the Board decided as follows:
1. Amend SEBI (Mutual Funds) Regulations, 1996 to merge credit exposure limits for single issuer of money market instruments and non-money market instruments at the scheme-level.
2. Amend SEBI (Mutual Funds) Regulations, 1996 so that single issuer limit is reduced to 10% of NAV extendable to 12% of NAV after trustee approval.
3. Reduce exposure limit to a single sector from the current 30% of NAV to 25% of NAV.