(Reuters) – India’s markets regulator, on Wednesday, proposed that asset management firms (AMCs) deploy the funds collected by newly launched mutual fund schemes, or new fund offers (NFOs), within 30 days of allocation of units to investors.
The Securities and Exchange Board of India’s consultation paper proposed that AMCs could extend the timeline by another 30 days if their investment committee approved.
Currently, there is no deadline for AMCs to use the funds collected in new mutual fund schemes.
If an AMC fails to meet the proposed timeline, it will not be allowed to launch new schemes or levy exit loads, which are fees, on investors leaving after 60 days, the SEBI proposed.
It also proposed that these rules apply to all NFOs other than index funds or exchange-traded funds.
The regulator has sought public comments on the proposals by Nov. 20.
(Reporting by Nishit Navin in Bengaluru; Editing by Savio D’Souza)
