Enhancement of Overseas Investment limits for Mutual Funds

Investment limits for Mutual Funds SEBI

Security Exchange Board of India (SEBI) vide SEBI Circular No. SEBI/HO/IMD/IMD-II/DOF3/P/CIR/2021/571 dated 03rd June, 2021 has notified circular with respect to“Enhancement of Overseas Investment limits for Mutual Funds”in exercise of the powers conferred underSection 11 (1)of the Securities and Exchange Board of India Act, 1992, read with Regulation77 of the Securities and Exchange Board of India (Mutual Funds) Regulations,1996.

  • Aim: to protect the interests of investors in securities and to promote thedevelopment of, and to regulate the securities market
  • Applicability: shall come into force with immediate effect, i.e. 03.06.2021.
  • Relevant Provisions: The Para 1 of SEBI Circular No. SEBI/HO/IMD/DF3/CIR/P/2020/225 dated November 05, 2020 specified the overseas investment limits per Mutual Fund.

(To read more: Click here)

  • Key Highlights:

SEBI has received various representations from Mutual Fundindustry to enhance the investment limits per Mutual Fund, the limits are beingrevised as under:

NormsOld Provisions Circular No. SEBI/HO/IMD/DF3/CIR/P/2020/225 dated 05.11.2020New Provisions (enhanced limit)
Mutual Funds can make overseas investmentsSubject to a maximum of US $ 600 million per Mutual Fund, within the overall industry limit of US $ 7 billion.subject to a maximum ofUS $ 1 billion per Mutual Fund, within the overall industry limit of US $ 7 Billion.
Mutual Funds can make investments in overseas Exchange Traded Fund (ETF(s))subject to a maximum of US $ 200 million per Mutual Fund, within the overall industry limit of US $ 1 billionsubject to a maximum of US $ 300 million per Mutual Fund, within the overall industry limit of US $ 1 billion.
    In respect of investment limits to be disclosed in the scheme documents at the time of NFO as specified in Para 2.2 of the aforesaid circular,Mutual Funds launching new schemes intending to invest in Overseas securities / Overseas ETFs shall ensure that the scheme documents shall disclose the intended amount that they plan to invest in Overseas securities / Overseas ETFs subject to maximum limits specified at Para 1.   Such limits disclosed in scheme documents will be valid for a period of six months from the date of closure of NFO.such limits would henceforth be soft limits for the purpose of reporting only by Mutual Funds on monthly basis in the format prescribed vide SEBI circular dated November 5, 2020.
The investment limits on ongoing schemes as specified in Para 2.3 of the aforesaid circularFor all ongoing schemes that invest or are allowed to invest in Overseas securities / Overseas ETFs, an investment headroom of 20% of the average AUM in Overseas securities / Overseas ETFs of the previous three calendar months would be available to the Mutual Fund for that month to invest in Overseas securities / Overseas ETFs subject to maximum limits specified at Para 1, as the case maybe.
Link of the CircularClick HereClick Here

Kindly Note: All other conditions specified in the above mentioned Circular No.: SEBI/HO/IMD/DF3/CIR/P/2020/225 dated Nov 05, 2020shall remainunchanged.

Link of the Circular: Click Here

About the Author

CS LALIT RAJPUT

Company Secretary having 6+ years of post qualification experience in the Compliance Management Services industry by serving Corporates including Listed Companies, Corporate Secretarial Firms and LLP. 
Disclaimer: Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information. In no event the authors shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.

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