SEBI Intraday Borrowing for Mutual Funds: 214th Board Decisions
Why in the news
At its 214th meeting in Mumbai on 19 June 2026, chaired by Tuhin Kanta Pandey, SEBI cleared changes to the SEBI (Mutual Funds) Regulations, 2026. A consultation paper of 13 May 2026 (comments till 3 June) came first, with inputs from MFAC and AMFI.
Key facts
- Earlier rule: intraday borrowing only for redemption and unitholder payouts, capped at guaranteed receivables from GoI, RBI and CCIL; implementation was deferred till 15 July 2026.
- Why changed: AMFI argued the narrow scope ignored how funds actually use such borrowing.
- Safeguards: no use as leverage; borrowing must end by close of day or convert to overnight borrowing within limits.
| Feature | Before | Now |
|---|---|---|
| Purposes | Redemptions and payouts | Also trade settlement, forex, MTM on derivatives, repaying borrowings |
| Receivable base | Guaranteed receivables only | Expected inflows including non-guaranteed ones |
| Ceiling | Guaranteed receivables | May exceed receivables if cleared by day end |
| Leverage | Restricted | Expressly prohibited |
| Cost | AMC | AMC (unchanged) |
| 20% cap | Applies | Still applies to unitholder payouts |
Existing limits under Regulation 42(1)
- Borrowing up to 20% of a scheme’s net assets, for at most 6 months.
- Only for temporary needs: redemptions, interest or IDCW payouts and trade settlement by equity index funds/ETFs for under-execution.
Other Board decisions
- Buybacks: open market share buybacks through exchanges return from 1 August 2026, under amended Buy-back Regulations, 2018; to finish within 66 working days with at least 40% of earmarked funds used in the first half.
- GARUDA (Green-Channel: AIF Rollout Upon Document Acknowledgement): new regular AIF schemes launch within 10 working days; accredited-investor-only schemes and angel funds can launch on registration.
Background
- Mutual funds: pooled vehicles run by AMCs; SEBI regulates them since 1996; average AUM about ₹82 lakh crore as of April 2026.
- AMFI: industry body formed 22 August 1995, Mumbai; self-regulation and investor education; not a statutory regulator.
- SEBI: set up 12 April 1988, statutory since the SEBI Act, 1992; Mumbai-based; reports to the Finance Ministry; Chairman Tuhin Kanta Pandey since 1 March 2025.
Exam angle
- Meeting: 214th SEBI Board, 19 June 2026.
- GARUDA expansion and its 10-working-day timeline.
- Existing cap: 20% of net assets for 6 months.