Sebi Finalizes Intraday Borrowing Rules for Mutual Funds, Effective April 1
The move formalizes a common liquidity tool to manage same‑day inflow–outflow gaps in liquid and overnight schemes.
Overview
- The framework takes effect April 1, 2026, and requires AMC and trustee boards to approve an intraday borrowing policy that the AMC must publish on its website.
- Intraday loans are permitted only for unit redemptions or repurchases, interest payments, or IDCW payouts to unitholders.
- Borrowing is capped at same‑day guaranteed receivables, defined to include proceeds due from TREPS, reverse repos, G‑Secs, T‑bills, SDLs, STRIPS, related interest, and sale proceeds.
- Any cost of borrowing or losses from delayed receipts must be absorbed by the AMC rather than the scheme.
- These intraday loans are exempt from the 20% borrowing limit under Regulation 42(1) if conditions are met, and equity index funds/ETFs may borrow for under‑executed sells only to join the Closing Auction Session starting August 3, 2026.