Sebi has allowed mutual funds to use intraday borrowing facilities to manage short-term liquidity mismatches arising from differences in market settlement timings. The new framework will come into effect from September 1, 2026. It will apply to all mutual funds, asset management companies, trustee companies, boards of trustees and AMFI. The circular replaces earlier guidelines on mutual fund borrowings under Sebi’s master circular and a March 25 circular.
Under the new rules, mutual funds can use intraday borrowings for unitholder payouts such as redemptions, IDCW payouts and interest payments. They can also use the facility for pay-ins related to investments made by a scheme, mark-to-market obligations, foreign exchange settlements and repayment of existing borrowings.
