Mumbai: Capital market regulator Sebi on Monday tightened the norms governing mutual funds investment in debt securities by lowering the maximum exposure that a fund can have in a single company and sector.
According to the new regulations announced on Monday, a mutual fund debt scheme can’t invest more than 10 per cent of its corpus in a debt instrument issued by a company. Earlier the limit was 15 per cent.
Similarly, the single sector exposure limit for a debt mutual fund scheme has been lowered to 25 per cent from 30 per cent earlier.
Additionally, the regulator also reduced the additional exposure limit provided for housing finance companies in finance sector from 10 per cent to 5 per cent of the net asset value.
“The review of single issuer, sector level exposure limit and introduction of group level exposure limits for investment in debt instruments would mitigate risks arising on account of high levels of exposure in the wake of events pertaining to credit downgrades, put mutual funds in a better position to handle adverse credit events,” Sebi said on Monday.
