Sebi's fixed timelines to address delays in NFO fund deployment
Subscribe to enjoy similar stories. NEW DELHI : In a pivotal regulatory proposal, the Securities and Exchange Board of India (Sebi) has outlined fixed timelines for deploying funds collected through new fund offers (NFOs). The proposal mandates asset management companies (AMCs) to allocate funds within 30 days of NFO closure, with a possible 30-day extension upon committee approval.
The market regulator's objective is to enhance transparency and safeguard investor interests by reducing fund idle time and ensuring alignment with stated asset allocations. Historically, delays in fund deployment have raised concerns, with investors expecting their contributions to be promptly invested according to each fund’s objectives. Sebi’s proposal aims to address these delays by establishing a deployment period of 30 business days, extendable by another 30 days in specific cases.
During its review of AMC operations, the regulator found that certain NFOs faced deployment delays due to issues like volatile markets and large fund sizes, hindering efficient fund allocation. This timeline aims to eliminate prolonged holding periods, ensuring investors benefit sooner from market movements. It also reflects Sebi’s ongoing efforts to keep pace with the growth and dynamics of India’s mutual fund industry.
The move seeks to boost accountability and set a benchmark for AMCs to incorporate into their strategic planning. The proposed timeline is part of Sebi’s broader agenda to strengthen mutual fund regulations, particularly for NFOs, where delays in fund deployment have caused investors to miss market opportunities. Sebi’s analysis of three years’ data shows that most funds managed to allocate assets within 60 days of an NFO’s closure, with over
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