Current Affairs

SEBI tighten Mutual Fund Norms

Current context: SEBI has tightened the norms for mutual funds by making it mandatory to hold at least 20% liquid assets in liquid schemes.
SEBI tighten Mutual Fund Norms
  • The liquid assets include cash, government securities, T-Bill and repo on Government securities.
  • The decision is taken in the wake of the recent credit crisis and aimed at ensuring sufficient liquidity and improving risk management.
  • Also, Fund houses have to match 20% norm before they start their investment.
  • The parking of funds in short term deposits of scheduled commercial banks won’t be charged investment management and advisory fees by the asset management company (AMC).
  • Investors will be charged with levy exit load by Mutual fund if they exit within seven days of investment, however, no levy exit load will be charged to an investor who made an investment in liquid funds before the prescribed date.
  • The new rule is applicable from 1st April 2020.

Question: 

Q.1 SEBI has recently made it mandatory to hold at least _____% liquid assets in mutual fund liquid schemes?
a. 10%
b. 15%
c. 20%
d. 25%
SEBI tighten Mutual Fund Norms SEBI tighten Mutual Fund Norms Reviewed by Neha Verma on September 24, 2019 Rating: 5

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