PRESS RELEASE
PR No.139/2007
Parking of Funds by Mutual Funds in Short Term Deposits of
Scheduled Commercial Banks – Pending deployment
SEBI vide circular No. SEBI/IMD/CIR No. 1/91171/07 dated April 16, 2007 has stipulated guidelines for parking of funds by mutual funds in short term deposits of scheduled commercial banks – pending deployment. Important features of the circular issued are detailed below:
1. ‘Short term’ for such parking shall be treated as a period not exceeding 91 days.
2. No mutual fund scheme shall park more than 15% of the net assets in Short term deposit(s) of all the scheduled commercial banks put together. However, it may be raised to 20% with prior approval of the trustees. Also, parking of funds in short term deposits of associate and sponsor scheduled commercial banks together shall not exceed 20% of total deployment by the mutual fund in short term deposits.
3. No mutual fund scheme shall park more than 10% of the net assets in short term deposit(s), with any one scheduled commercial bank including its subsidiaries.
4. The asset management company shall not be permitted to charge investment management and advisory fees for parking of funds in short term deposits of scheduled commercial banks in case of liquid and debt oriented schemes.
The full text of the above circular is available on the website: www.sebi.gov.in
Mumbai
April 16, 2007