Norms regarding holding of liquid assets in open ended debt schemes & stress testing of open ended debt schemes

Last updated: 07 November 2020

Save Share

Quick Summary

The Securities and Exchange Board of India (SEBI) has introduced new rules for open-ended debt schemes to enhance liquidity risk management. Most debt schemes must now hold at least 10% of their net assets in liquid assets like cash and government securities, effective from February 1, 2021. Additionally, all open-ended debt schemes, except overnight funds, are required to conduct stress testing starting December 1, 2020. These measures aim to protect investors and ensure market stability.

Securities and Exchange Board of India CIRCULAR SEBI/HO/IMD/DF3/CIR/P/2020/229 November 06, 2020 All Mutual Funds/ Asset Management Companies (AMCs)/ Trustee Companies/Boards of Trustees of Mutual Funds/ Association of Mutual Funds in India (AMFI) Sir/ Madam, Subject: Norms regarding holding of liquid assets in open ended debt schemes stress testing of open ended debt schemes 1. In order to augment the liquidity risk management framework for all open ended debt schemes,

Daily Limit Reached

You have reached your daily limit of 2 Free Notice & Circular

Subscribe to CCI PRO for unlimited access

Why Upgrade to CCI PRO?

No Ads
WhatsApp Community
Daily E-Newsletter
Unlimited Notice & Circular Access
Profile Visitors
Link Social Profiles
Featured Job Posts
Pro Badge
Expert GST Guidance
Unlimited Forum Replies
Download Content in PDF

1 Year PLAN - Rs.~~1999~~

1799

(Excl. of GST ₹323)

2 Years PLAN - Rs.~~3499~~

3149

(Excl. of GST ₹566)

BEST VALUE

3 Years PLAN - Rs.~~4999~~

4499

(Excl. of GST ₹809)

View all CCI PRO benefits

Already a PRO member? Login here for an ad-free experience. 07941056694

FAQ :

Most open-ended debt schemes must hold at least 10% of their net assets in liquid assets, which include cash, government securities, T-bills, and repos on government securities.

Overnight Fund, Liquid Fund, Gilt Fund, and Gilt Fund with 10-year constant duration are exempt from the requirement to hold 10% in liquid assets.

The provisions regarding holding liquid assets will be effective from February 1, 2021.

Yes, all open-ended debt schemes, except for overnight schemes, are now mandated to conduct stress testing.

The requirement for stress testing will be effective from December 1, 2020.

Yes, a committee has been formed to review these subjects, and based on their recommendations, the norms for holding liquid assets and the methodology for stress testing may be modified.

Notification No : SEBI/HO/IMD/DF3/CIR/P/2020/229
Source : https://www.sebi.gov.in/legal/circulars/nov-2020/circular-on-norms-regarding-holding-of-liquid-assets-in-open-ended-debt-schemes-and-stress-testing-of-open-ended-debt-schemes_48110.html

143 Views Comment Share Investments & Personal Finance Report

Notification posted by

CCI News Desk

Finance news reporter covering taxation, GST, income tax, business compliance, and economy updates. I simplify complex financial topics into easy-to-understand articles for professionals, taxpayers, and business owners on leading finance and tax platforms.

Comments