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Sebi Relaxes Compliance Requirements For Mutual Funds

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Sebi Relaxes Compliance Requirements For Mutual Funds
Himali Patel - 24 March 2020

The Securities and Exchange Board of India (Sebi), in the light of the recent market events surrounding COVID-19 has decided to temporarily relax compliance requirements for mutual funds. Having said that, when it comes to all schemes New Fund Offer (NFO), where the regulator has already issued an observation letter and is yet to be launched, would have a validity period of one year from the date of Sebi letter. Similarly, Sebi has extended such timelines for few certain disclosures.

“In light of the difficulties expressed by AMCs, the access control presently exercised in the AMC’s dealing room including call recording of deals is temporarily relaxed subject to checks and balances including electronic confirmation by way of email or other system having audit trail are in place,” notes Sebi.

For the mutual fund houses, the half yearly disclosures of unaudited financial results which was due in April 30, 2020 have been extended for one more month till May 31, 2020. Further the disclosure pertaining to commission paid to distributors has been extended from April 10, 2020 to May 10, 2020. When it comes to the yearly disclosure of investor complaints with respect to mutual funds, it has been extended from May 31, 2020 to June 30, 2020. Sebi has also extended the effective date of implementation of certain policy initiatives.

This includes risk management framework for liquid and overnight funds and norms governing investment in short term deposits, the implementation date for the same has been extended to May 1, 2020 from the due date April 1, 2020. Further the circular related to review of investment norms for mutual funds for investment in debt and money market instruments dated October 1, 2019, the implementation date has been extended to May 1, 2020 from April 1, 2020.

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