Faster NFO deployment and more transparency Mumbai: The Securities and Exchange Board of India (SEBI) will implement new mutual fund rules from April 1, 2025. These changes aim to improve transparency, ensure timely fund deployment, and enhance accountability among asset management companies (AMCs).
AMCs will have to deploy funds collected through New Fund Offers (NFOs) within a specified time. If they fail to do so, investors can exit without paying an exit load. This rule will prevent AMCs from raising excessive funds during NFOs and ensure proper allocation.
SEBI has set a 30-day timeline for Asset Management Companies (AMCs) to deploy funds raised through NFOs. This is a reduction from the previous 60-day period. Mutual fund schemes will need to disclose stress test results. This will provide investors with better insights into the financial stability of the schemes.
A portion of AMC employees’ salaries will be invested in mutual fund schemes. The investment amount and choice of schemes will depend on their roles, aligning their interests with investors.
The 30-day deployment rule ensures that investor funds are put to work quickly, reducing the risk of idle capital. If AMCs fail to deploy the funds within the specified period, investors have the option to exit without incurring an exit load.
By limiting the amount of money AMCs can raise, SEBI prevents the collection of excess funds that cannot be deployed efficiently. Investors will also be assured that their money will be invested promptly and at fair valuations.
