On November 5, 2020, Securities and Exchange Board of India (SEBI) issued a circular on “Enhancement of overseas investment limits for mutual funds” under which the foreign investment limit per mutual fund (MF) house has been doubled to $600 million, from the existing $300 million, within the overall industry limit of US $ 7 billion.
Key Features of Circular:
–SEBI has reserved an amount of $50 million per fund house.
–Mutual Funds can invest in overseas Exchange Traded Fund (ETFs) subject to a maximum of US $ 200 million per mutual fund, within the overall industry limit of US $ 1 billion.
–A mutual fund launching a New Fund Offer (NFO) and intending to invest overseas will be required to specify the amount it will invest outside India and use the limit specified within six months.
–For existing schemes, SEBI specified headroom of 20% of the assets under management (AUM) in the previous three months in overseas securities, for investment in foreign securities subject to the overall limit of $600 million.
–Asset Management companies (AMCs) would have to report the utilization of the foreign limit to SEBI on a monthly basis, within 10 days from the end of each month.
About Asset Management company (AMC):
It is a firm that invests the funds pooled from individual investors in securities with the objective of optimal return for investors.
Recent Related News:
i.On October 3, 2020 The Appointments Committee of the Cabinet (ACC) headed by Prime Minister Narendra Modi has approved the term extension of appointment of Madhabi Puri Buch, Whole-Time Member (WTM), Securities and Exchange Board of India (SEBI) for one year effective from October 4, 2020 or until further orders, whichever is earlier. She is the 1st & only woman WTM and also the 1st from the private sector to be appointed a SEBI Board member.
ii.On September 21, 2020 Securities and Exchange Board of India (SEBI) constituted the Technical Group on Social Stock Exchange under the Chairmanship of Harsh Kumar Bhanwala, former Chairman of NABARD. The group will develop a framework for onboarding non-profit organisations and for-profit enterprises.
About Securities and Exchange Board of India (SEBI):
Establishment– April 12, 1992
Headquarters– Mumbai, Maharashtra
Chairman– Ajay Tyagi