SEBI extends date of implementation of Risk Management Framework (RMF) for Mutual Funds to April 01, 2022

Circular no. SEBI/HO/IMD/DF2/CIR/P/2021/683 Dated, 10-12-2021

The SEBI, on the request received from the Association of Mutual Funds in India (AMFI), has decided to extend the date of implementation of the Risk Management Framework to April 01, 2022, which was to be effective from January 01, 2022. Also, SEBI specified norms for investment in the Bills Re Discounting Scheme as well as guidelines on the usage of pool accounts by mutual funds.

AMCs shall have internal policies approved by the Board of AMC and Trustees to ensure that adequate operational processes and internal controls are in place to segregate and ring-fence the assets and liabilities of each scheme along with segregation and ring-fencing of securities & bank accounts. The pool accounts for both securities and funds should have a nil balance at end of the day.

The SEBI further clarified that at no point in time, the securities or funds of one scheme shall be used for other schemes (s) and there shall be any conflict of interest amongst investors of various schemes. The responsibility to ensure segregation and ring-fencing of the assets and liabilities of each scheme along with that of bank accounts and securities accounts will lie with the board of an AMC and trustees.

In their half-yearly report submitted to SEBI, trustees of an AMC will confirm that the assets and liabilities of each scheme along with their bank accounts and securities accounts are segregated and ring-fenced daily except the unidentified transactions of funds during the half-year period.

Under the Investment in Bills Re Discounting Scheme (BRDS), the single issuer limit and the group exposure limit shall be calculated at the issuing bank level as BRDS are issued with recourse to the issuing bank. Additionally, exposure of mutual fund schemes in such instruments will not exceed 5 percent of the net assets of the schemes.

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