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New Circular Issued by SEBI regarding the AIFs, VCFs, and MFs
Securities and Exchange Board of India (SEBI) has issued circulars prescribing the following:
- Relaxations in compliances for AIFs (Alternate Investment Funds) and VCFs (Venture Capital Funds) on 31 May 2021;
- Enhancement of overseas investment limits for MFs (Mutual Funds) on 3 June 2021.
The changes given by SEBI in these circulars have been summarized below.
Relaxation in Compliance Requirements for AIFs and VCFs
Due to the ongoing second wave of the COVID-19 pandemic, SEBI received numerous representations from the AIF and VCF industry requesting for extension of timelines for various regulatory filings and compliances. After consideration, SEBI has decided to extend the due dates of all regulatory filings prescribed under SEBI(Alternative Investment Funds) Regulations, 2012 during the period ending March 2021 to July 2021 up to 30 September 2021.
Enhancement in overseas investment limit for MFs
SEBI announced enhancements of overseas investment limits for mutual funds as under:
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Existing Limits |
Revised Limits |
| Overseas investments |
Maximum of US 600 million per Mutual Fund, within the overall industry limit of USD 7 billion |
Maximum of USD 1 billion per Mutual Fund, within the overall industry limit of USD 7 billion |
| Investments in overseas Exchange Traded Funds (ETFs) |
Maximum of USD 200 million per Mutual Fund, within the overall industry limit of USD 1 billion |
Maximum of USD 300 million per Mutual Fund, within the overall industry limit of USD 1 billion |
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Links to the circular:
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Our Comments
- Relaxation in compliance due dates for AIFs and VCFs is a much-required cushion in the current deadlock and restrictions that the second wave of the pandemic have resulted in. The extensions will grant a breather to AIFs and VCFs without comprising with providing timely and transparent disclosures to investors.
- Fund managers have been keen to multiply return on investment by riding the bullish trend in the US technology market. Internationally focused fund of funds offering the option to diversify with global equities have been announced by fund houses in the last few months. There has been net inflows of over INR 5,600 crore in FoF investment overseas, and the assets have increased from INR 7,642 crore last November to nearly INR 14,000 crore in April 20211. This enhancement in overseas investment limit will enable fund managers to provide higher returns on investment, and multiply savings of Indian investors during this phase of prolonged economic stress.
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