SEBI directs mutual funds to suspend fresh subscriptions in overseas ETFs from April
Also Read: These ELSS mutual funds gave over 20 percent annualised returns in the past five years. Check details Mutual funds have also been directed to value the utilisation of overseas investment limits at the cost of acquisition and not as per the current market prices.
The Reserve Bank of India (RBI) regulates fund inflows and outflows. Currently there is an overall industry level limit of $7 billion for mutual funds that invest outside India.
After the industry breached this limit in February 2022, mutual funds were asked to stop accepting any fresh inflows. Later in 2023, global markets witnessed a sharp correction which led to a reduction in the valuation of international stocks.
This reduced the cumulative investments made by the global mutual fund schemes and created space for fresh investments in this category. Subsequently, the central bank again allowed fresh inflows into the international schemes subject to certain restrictions which led to some fund houses accepting fresh investments.
In the same year, SEBI had given a concession that fund houses could invest in foreign stocks again if the assets under management had dropped due to the correction in global market. Now, the limit to invest in such overseas ETFs is $1 billion.Milestone Alert!
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