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On 27th June 2019 Securities and Exchange Board of India {SEBI} announced that now the rules for mutual funds investments will be tougher for borrowers to make deals with Fund Managers to raise capital. The new rules will surely decrease the attractiveness of Mutual Funds Investments as a source of extracting capital for firms and NBFCs. In this blog, we are going to see how these rules will affect the mutual funds investment and what can be adapted as a replacement.
The Securities and Exchange Board of India {SEBI}[1] is a regulatory body which is appointed to look upon the financial matters and markets in India. The primary functions of SEBI include;
The roles of SEBI in mutual funds investment are as follows;
Read our article:All you need to know about SEBI’s Insider Trading Regulations
Mentioned below are the earlier practices before the changes made in this board meeting and it’s after effects;
The board meeting of SEBI held in Mumbai on 27 June 2019 came up with the following conclusions at the end of the meeting.
The Schemes were defined in six points:
Read our article:New Guidelines on Liquidity Risk Management framework for NBFCs
This scheme is designed to help the investors in the following ways;
The change in the regulations for mutual funds investments has tightened under which the mutual funds function. Various rules such as graded exit load increased security for credit enhanced securities, and an increase in capital allocations in liquid assets might lead to confusion for the investors and also can make the process complex. This may cause borrowers like firms and NBFCs to preferring other sources of capital like alternative investments funds and high net-worth individuals.
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