Overview

• SEBI’s circular, effective immediately, requires actively managed mutual funds to correct passive breaches within 30 business days.
• Passive breaches arise from factors beyond managers’ control, including market fluctuations, corporate actions and large redemptions.
• The rule applies to all actively managed schemes but excludes Index Funds and Exchange-Traded Funds.
• Issued under Section 11(1) of the SEBI Act and Regulation 77, it implements recommendations from the Mutual Funds Advisory Committee.
• SEBI aims to maintain scheme risk profiles within approved limits and ensure uniform breach handling across the mutual fund industry.