SEBI Provides Clarity On Rules For MF Investing In Short Term Bank Deposits
Business
oi-Olga Robert
By Staff
In a circular dated 16 August, the Securities and Exchange Board of India (SEBI) provided clarification on investments of banks in mutual fund schemes that have parked money in the lender's short-term deposits (STD).
The circular, titled "Parking of funds in short-term deposits of scheduled commercial banks by mutual funds - pending deployment," the markets' regulator said, "it is clarified that Trustees/Asset Management Companies (AMCs)shall ensure that no funds of a scheme is parked in STD of a bank which has invested in that scheme."
"Trustees/AMCs shall also ensure that the bank in which a scheme has STD do not invest in the said scheme until the scheme has STD with such bank," it added.
The regulations allow a mutual fund to invest funds in short-term deposits of schedule commercial banks, subject to certain conditions.
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