MUMBAI: The Securities and Exchange Board of India (SEBI) on Thursday said investors won’t be allowed to exit from close-ended mutual fund schemes before maturity and asked fund houses to list them on stock exchanges. The market regulator also said all such funds must invest in instruments in line with their maturity profile.

“For all close-ended schemes, no early exits will be provided by the funds,” SEBI Chairman C B Bhave told a media briefing following a board meeting earlier in the day. “All schemes will have to be listed on the stock exchange,” he added.

The decision comes in wake of a liquidity crisis faced by the industry two months ago as investors pulled out from fixed income funds fearing their credit quality.

More than Rs 90,000 crore flowed out of debt funds during the period, creating a liquidity crunch for the Rs 4 trillion industry and forcing the central bank to offer money through a special money market operation to ease the pressure.
Under its special repo auction, the central bank is offering Rs 60,000 crore to banks. Funds, in turn, can borrow money by swapping their large but illiquid holdings of bank debt for cash.

The regulator also extended the validity period of initial public offers to one year from three months now.

source: Economictimes

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