The Securities and Exchange Board of India (SEBI) may soon come up with guidelines to mandate minimum asset allocation in liquid assets by debt mutual funds in their schemes.
Speaking at the Annual General Meeting of the Association of Mutual Funds in India (AMFI), SEBI Chairman Ajay Tyagi said that such a move is aimed at improving liquidity in schemes and it would also help schemes to meet sudden redemption pressures.
He was of the view that as far as the performance of the mutual fund industry is concerned, overall, the industry has weathered the pandemic's storm well, which, he said demonstrates the robustness of the regulatory framework as well as the maturity of the industry.
Tyagi also noted that the mutual fund industry, however, also went through several patches of challenges, especially on the debt mutual fund side.
"Some of the issues that arose during the period are now addressed and some are in the process of being addressed. The contemplated policy measures inter-alia include stress testing, minimum asset allocation in liquid assets and a swing pricing like mechanism," he said.
Tyagi said that an expert committee will be constituted to frame a stress testing methodology for all open ended debt mutual fund schemes.
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