Sebi plans to set a time frame for deployment of NFO funds
Sebi) has proposed that asset management companies must deploy funds collected through new fund offers (NFOs) within 30 days from the date of allotment of units.
In exceptional cases, if the fund house is not able to deploy the funds within this timeframe then it should give the reasons in writing to the investment committee.
The committee may extend the timeline by 30 days, while also making recommendations on how to ensure deployment within this timeframe and monitoring it.
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Sebi said that if the funds are not deployed as per the asset allocation mentioned in the scheme information document (SID), then asset management companies (AMCs) may not be allowed to launch any new scheme. It may also not be permitted to levy an exit load on investors exiting such schemes after 60 days.
«During the examination of the periodic submissions made by AMCs, it was observed that in a certain instance, there was a considerable delay in deployment of the funds collected through NFO. The delay was attributed to the size of the funds collected as well as the volatility in the market,» Sebi said in a discussion paper on Wednesday.
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