Mutual funds will now have to deploy NFO proceeds within 30 days, says Sebi
Sebi) has released a consultation paper specifying the timelines for deployment of funds collected by asset management companies (AMCs) in new fund offer (NFO) as per asset allocation of the scheme within 30 business days.
According to Sebi, the AMCs should specify achievable timelines in the SID regarding the deployment of the funds as per the specified asset allocation of the scheme and should garner funds during the NFO accordingly.
The AMCs may be mandated to deploy the funds garnered in NFO within the said period from the date of allotment of units. In case if an AMC is not able to deploy the funds in 30 business days, it has to give the reasons in writing, including details of efforts taken to deploy the funds, and this should be placed before the Investment Committee.
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The Investment Committee may extend the timeline by 30 business days, while also making recommendations on how to ensure deployment within the stipulated time going forward and monitoring the same. After the reasons are shared, the Investment Committee should examine the root cause before approving part or full extension.
The committee should not ordinarily give part or full extension where the assets for such schemes are liquid and readily available.
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