Review of provisions of the circular dated September 24, 2019 issued under SEBI (Mutual Funds) Regulations, 1996 due to the COVID - 19 pandemic and moratorium permitted by RBI

Last updated: 24 April 2020

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This circular from SEBI addresses how the COVID-19 pandemic and the RBI's permitted moratorium might affect the valuation of money market or debt securities held by mutual funds. It clarifies that if a delay in payment or extension of maturity is solely due to the lockdown or the moratorium, valuation agencies appointed by AMFI may not consider it a default. However, AMCs remain responsible for the true and fair valuation of securities.

Securities and Exchange Board of India CIRCULAR SEBI/HO/IMD/DF3/CIR/P/2020/70 April 23, 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, Sub: Review of provisions of the circular dated September 24, 2019 issued under SEBI (Mutual Funds) Regulations, 1996 due to the COVID 19 pandemic and moratorium permitted by RBI. 1. Currently, Valuation agencies appointed

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FAQ :

The circular reviews provisions of a previous circular from September 24, 2019, considering the impact of the COVID-19 pandemic and the RBI's moratorium on the valuation of mutual fund securities.

A delay in payment of interest/principal or extension of maturity by an issuer will not be considered a default if valuation agencies determine it arose solely due to the COVID-19 pandemic lockdown or the RBI's permitted moratorium.

The valuation agencies appointed by AMFI will make this determination based on their assessment.

If there is a difference in the valuation of securities provided by two valuation agencies in such scenarios, the conservative valuation shall be accepted.

This modification to the circular dated September 24, 2019, will be in force until the period of moratorium permitted by the RBI.

Yes, AMCs shall continue to be responsible for the true and fairness of valuation of securities, as per SEBI regulations and principles.

Notification No : SEBI/HO/IMD/DF3/CIR/P/2020/70
Source : https://www.sebi.gov.in/legal/circulars/apr-2020/review-of-provisions-of-the-circular-dated-september-24-2019-issued-under-sebi-mutual-funds-regulations-1996-due-to-the-covid-19-pandemic-and-moratorium-permitted-by-rbi_46549.html

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