- The Securities and Exchange Board of India(Sebi) has introduced more checks and balances for mutual funds(MFs) to secure investors and stem systemic risks.
- SEBI has said that mutual fund schemes can now invest only in listed debt or equity.The valuation of securities in debt funds will now be on mark-to-market basis instead of the earlier practice of considering it on an amortisation basis.
- SEBI said that it will initiate action against mutual funds(MFs) if there are defaults in cases involving loans against shares to company promoters.
- SEBI has also said that it has decided to ban mutual funds from entering into standstill pacts with companies apart from making them hold at least 20% assets of liquid funds in cash equivalents.
- Liquid fund is a category of mutual fund which invests primarily in money market instruments like certificate of deposits,treasury bills, commercial papers and term deposits.They invest in securities with a residual maturity of up to 91 days.
- Mutual Fund(MF) is an investment vehicle made up of a pool of money collected from public investors.The pooled money is used to buy other securities by professional money managers.It charges a small fee for managing the money.
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