Mutual Funds: BIG DECISION by Sebi - Here is what investors must know

In a bid to provide flexibility  to  mutual  funds' houses, the Securities and Exchange Board of India (SEBI) has given nod for mutual funds to invest in unlisted non-convertible debentures (NCDs) up to a maximum of 10% of the debt portfolio of the scheme subject to such investments in unlisted NCDs having simple structures as  may  be  notified  from  time  to  time,  being  rated,  secured  and  with  monthly coupons. The decision was taken on August 20 SEBI Board meeting held in Mumbai.

SEBI informed about the approval in a written press statement citing, "The  Board  approved  the  proposal  for  amendments  to  SEBI  (Mutual  Funds) Regulations, 1996 with respect to prudential norms for Investment and Valuation of Debt and Money Market instruments by Mutual Funds in the Board meeting held on June 27, 2019 subject to the following: The  Board  decided  to  give  flexibility  to  mutual  funds  to  invest  in  unlisted  non-convertible debentures (NCDs) up to a maximum of 10% of the debt portfolio of the scheme subject to such investments in unlisted NCDs having simple structures as  may  be  notified  from  time  to  time,  being  rated,  secured  and  with  monthly coupons. This shall be implemented in a phased manner by June 2020."

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In this meeting, the SEBI Board also considered the recommendations of the working group constituted for reviewing the SEBI (Foreign Portfolio Investors or FPI) Regulations, 2014 and approved the proposed new set of regulations. The key focus of the proposed regulations is to simplify and rationalize the existing regulatory framework for foreign portfolio investors (FPIs) in terms of easing the operational constraints and compliance requirements. The SEBI Board also approved the norms for migration of companies listed on the Innovators Growth  Platform  (IGP)  to regular trade category of the mainboard.