MASTER CIRCULAR
HO/24/13/11(1)2026-IMD-POD-1/I/7602/2026 March 20, 2026
To,
All Mutual Funds (‘MFs’)
Asset Management Companies (‘AMCs’)
Trustee Companies of Mutual Funds
Registrar to an Issue and Share Transfer Agents (‘RTAs’)
Association of Mutual Funds in India (AMFI)
All Recognized Stock Exchanges & Clearing Corporations
All Stock Brokers
All Depositories
All Custodians
Dear Sir/ Madam,
Subject: Master Circular for Mutual Funds
1. The SEBI (Mutual Funds) Regulations, 2026 has been notified and the same
shall come into force with effect from April 01, 2026.
2. For effective regulation of Mutual Fund Industry, the Securities and Exchange
Board of India (“Board”) has been issuing various circulars from time to time. In
order to enable the stakeholders to have an access to all the applicable
regulatory requirements at one place, the provisions of the said circulars issued
till March 31, 2024 were incorporated in the Master Circular for Mutual Funds
dated June 27, 2024. Subsequently, various guidelines/directions were issued
to Mutual Funds by way of circulars/letters.
3. In order to enhance readability and aid in ease of compliance, the Master
Circular for Mutual Funds has been updated, in line with the SEBI (Mutual Funds)
Regulations, 2026 and includes all relevant circulars issued to Mutual Funds till
March 20, 2026.
4. Vide Master Circular for Mutual Funds dated June 27, 2024, the
guidelines/directions contained in the circulars listed out in the Appendix to that
Master Circular were rescinded. In addition, with the issuance of this Master
Circular, the guidelines/directions contained in the circulars listed out at Sr. Nos.
1 to 34 in the Appendix to this Master Circular, to the extent they relate to the
Mutual Funds industry, shall stand rescinded.
5. With respect to the directions or other guidance issued by the Board, as
specifically applicable to Mutual Funds, the same shall continue to remain in
force in addition to the provisions of any other law for the time being in force.
Terms not defined in this Master Circular shall have the same meaning as
provided under the relevant Regulations.
6. Notwithstanding such rescission,
6.1. anything done or any action taken or purported to have been done or taken
under the rescinded circulars, including registrations or approvals granted,
fees collected, registration suspended or cancelled, any inspection or
investigation or enquiry or adjudication commenced or show cause notice
issued prior to such rescission, shall be deemed to have been done or
taken under the corresponding provisions of this Master Circular;
6.2. any application made to the Board under the rescinded circulars, prior to
such rescission, and pending before it shall be deemed to have been made
under the corresponding provisions of this Master Circular;
6.3. the previous operation of the rescinded circulars or anything duly done or
suffered thereunder, any right, privilege, obligation or liability acquired,
accrued or incurred under the rescinded circulars, any penalty, incurred in
respect of any violation committed against the rescinded circulars, or any
investigation, legal proceeding or remedy in respect of any such right,
privilege, obligation, liability, penalty as aforesaid, shall remain unaffected
as if the rescinded circulars have never been rescinded;
7. Pursuant to issuance of this Master Circular, the entities which are required to
ensure compliance with various provisions shall submit necessary reports as
envisaged in this Master Circular on a periodic/ continuous basis.
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8. This Master Circular shall come into force with effect from April 01, 2026. This
Master Circular for Mutual Funds shall replace the Master Circular for Mutual
Funds dated June 27, 2024.
9. This Master Circular is issued in exercise of powers conferred under Section
11(1) of the Securities and Exchange Board of India Act, 1992 to protect the
interests of investors in securities and to promote the development of, and to
regulate the securities market.
10. This Master Circular is available on the SEBI website at
https://www.sebi.gov.in/ under the category “Legal -> Master Circulars”.
Yours faithfully,
Peter Mardi
Deputy General Manager
Investment Management Department
Tel: 022 - 26449233
Email:peterm@sebi.gov.in
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INDEX
ABBREVIATIONS ............................................................................................................. 6
CHAPTER 1: OFFER DOCUMENT FOR SCHEMES...................................................... 8
CHAPTER 2: REGISTRATION ..................................................................................... 15
CHAPTER 3: CONVERSION & CONSOLIDATION OF SCHEMES, TYPES OF MUTUAL
FUND PLANS AND CATEGORIZATION & RATIONALIZATION OF MUTUAL FUND
SCHEMES ............................................................................................................... 23
CHAPTER 4: NEW PRODUCTS ................................................................................... 44
CHAPTER 5: RISK MANAGEMENT FRAMEWORK .................................................... 70
CHAPTER 6: DISCLOSURES & REPORTING NORMS ............................................... 86
CHAPTER 7: GOVERNANCE NORMS ...................................................................... 109
CHAPTER 8: SECONDARY MARKET ISSUES ......................................................... 156
CHAPTER 9: NET ASSET VALUE ............................................................................. 160
CHAPTER 10: VALUATION ......................................................................................... 169
CHAPTER 11: LOADS, FEES, CHARGES AND EXPENSES ...................................... 186
CHAPTER 12: IDCW DISTRIBUTION PROCEDURE .................................................. 194
CHAPTER 13: INVESTMENT BY SCHEMES ............................................................... 197
CHAPTER 14: ADVERTISEMENTS ............................................................................. 232
CHAPTER 15: INVESTOR RIGHTS & OBLIGATIONS ................................................ 237
CHAPTER 16: CERTIFICATION AND REGISTRATION OF INTERMEDIARIES ........ 252
CHAPTER 17: TRANSACTION IN MUTUAL FUNDS UNITS ....................................... 257
CHAPTER 18: CORPORATE DEBT MARKET DEVELOPMENT FUND (CDMDF) ...... 272
CHAPTER 19: EXECUTION ONLY PLATFORMS (EOP) ............................................. 277
CHAPTER 20: MUTUAL FUND LITE (MF LITE) FRAMEWORK .................................. 286
CHAPTER 21: SPECIALIZED INVESTMENT FUND (SIF) ........................................... 296
CHAPTER 22: MISCELLANEOUS ............................................................................... 312
APPENDIX: LIST OF RESCINDED CIRCULARS ......................................................... 316
INDEX OF ANNEXURES ............................................................................................... 336
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INDEX OF FORMATS ................................................................................................... 464
POLICY RELATED LETTERS/EMAILS ISSUED BY SEBI…………Refer the Attachment
AMFI BEST PRACTICE GUIDELINES…………………………………..Refer AMFI Website
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ABBREVIATIONS
American Depository Receipt ADR
Asset Management Company AMC
Asset under Management AUM
Association of Mutual Funds in India AMFI
Authorized Dealer AD
Base Expense Ratio BER
Bombay Stock Exchange BSE
Central Board of Direct Taxes CBDT
Clearing Corporation of India Limited CCIL
Compliance Test Reports CTR(s)
Common Account Statement CAS
Contingent Deferred Sales Charge CDSC
Compound Annual Growth Rate CAGR
Corporate Debt Market Development Fund CDMDF
Depository Participant DP
Execution only Platforms EOP
External Commercial Borrowings ECB
Financial Action Task Force FATF
Foreign Exchange Management Act FEMA
Foreign Institutional Investor FII
Foreign Portfolio Investor FPI
Fixed Maturity Plans FMP(s)
Global Depository Receipt GDR
Gold Exchange Traded Fund GETF
Gold Monetization Scheme GMS
Hindu Undivided Family HUF
International Organization of Securities Commission IOSCO
Investor Service Center ISC
Key Information Memorandum KIM
Know Your Client KYC
London Bullion Market Association LBMA
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Monthly Cumulative Report MCR
Monthly Average Assets Under Management MAAUM
Multilateral Memorandum of Understanding MMOU
Mutual Fund MF
Mutual Fund Advisory Committee MFAC
Mutual Fund Distributor MFD
National Stock Exchange NSE
Net Asset Value NAV
New Fund Offer NFO
Permanent Account Number PAN
Prevention of Money Laundering Act PMLA
Regulation XX Regulations XX of
SEBI (Mutual Funds)
Regulations 2026,
unless otherwise
specified
SEBI (Mutual Funds) Regulations 2026 MF Regulations
Securities and Exchange Board of India the Board
Scheme Information Document SID Offer
Statement of Additional Information SAI Document
Specialized Investment Fund SIF
Systematic Investment Plan SIP
Systematic Transfer Plan STP
Systematic Withdrawal Plan SWP
Trustee(s) Trustee Company
Unique Client Code UCC
Unit Holder Protection Committee UHPC
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CHAPTER 1: OFFER DOCUMENT FOR SCHEMES
1.1. Filing of Offer Document with the Board1
1.1.1. The Offer Document shall have two parts:
(a) Scheme Information Document (SID) incorporating all information
pertaining to a particular scheme; and
(b) Statement of Additional Information (SAI) incorporating all
statutory information on Mutual Fund.
1.1.2. The Mutual Funds shall prepare SID and SAI as per the formats
provided under Format No. 5A and 5B and shall file the same with the
Board in terms of the Regulations2. The Board of the AMC and the
Trustee(s) shall exercise necessary due diligence, ensuring that the
SID/SAI and the fees paid are in conformity with the Mutual Funds
Regulations3.
(a) Filing of Draft SID4:
(i) Draft SID on which observation(s) have been issued by the
Board shall be made available on SEBI’s website –
http://www.sebi.gov.in for at least 8 working days for
receiving public comments on the adequacy of disclosures
made in the document, after which AMC may launch the
scheme after filing the final SID and KIM in line with the
provisions of Paragraph 1.1.2(c) of this Master Circular.
(ii) Validity of observation(s) issued by the Board on SID shall be
in accordance with Paragraph 1.3 of this Master Circular.
(iii) AMC shall submit a soft copy of draft SID to the Board in
HTML or PDF format. AMC shall also submit an undertaking
to the Board, certifying that the information contained in the
soft copy is correct and accurate.
(b) Filing of SAI
(i) A single SAI (common for all the schemes) shall be filed with
the Board separately or along with first draft of SID. AMC
shall file a soft copy of SAI with the Board in PDF format after
incorporating the comments/observations, if any, from the
1 SEBI Circular No. SEBI/IMD/CIR No.5/ 126096/08 dated May 23,2008 and SEBI Circular No – SEBI/IMD/CIR
No.10/178129/09 dated September 29,2009, Refer SEBI email dated November 15, 2011, Refer SEBI letter No.
SEBI/HO/OW/IMD-II/DOF3/P/2022/4580/1 dated February 03, 2022
2 Regulation 24 of SEBI (Mutual Funds) Regulation 2026
3 SEBI Circular No. IIMARP/MF/CIR/01/428/97 dated February 28, 1997, Refer SEBI letter No. SEBI/HO/OW/IMD-
II/DOF3/P/25096/2022 dated June 17, 2022
4 SEBI Circular No. SEBI/HO/IMD/IMD-RAC-1/P/CIR/2024/179 dated December 20, 2024
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Board5 and shall upload the SAI on its website as well as on
AMFI website. The printed copy of SAI shall be made
available to the investor on request.
(ii) Updation of SAI - SAI shall be updated within 3 months from
end of financial year and filed with SEBI. Any material change
in the SAI shall be updated on the Mutual Fund and AMFI
website. SEBI shall be intimated of the changes made in the
SAI within 7 calendar days. The effective date for such
changes shall be mentioned in the updated SAI.
(c) Filing of final SID
(i) AMCs shall submit the final SID (after incorporating
comments of the Board) and KIM at least 2 working days prior
to the launch of the scheme, only through email to the
dedicated email id- imdsidfiling@sebi.gov.in.6 AMC shall also
submit an undertaking to the Board while filing the soft copy
that information contained in the soft copy of SID to be
uploaded on SEBI website is correct and accurate. The soft
copy shall also be uploaded on AMFI website 2 working days
prior to launch of the scheme7. Failure to submit the final SID
with the Board before it is issued for circulation shall invite
penalties under the Regulations8.
(ii) In case of any difference, in the nature of material alteration
to the suggestions made by the Board9 between the SID
being circulated and the final SID filed with the Board, the
Board shall order immediate withdrawal of the SID from
circulation and such withdrawal shall be publicized by the
Board.
1.2. Procedure for updating SID10
1.2.1. The Procedure for updating SID of open ended and interval
schemes shall be as follows11:
5 SEBI Circular No – SEBI/IMD/CIR No.10/178129/09 dated September 29, 2009
6 Substituted vide SEBI Circular No. SEBI/HO/IMD/IMD-RAC-2/P/CIR/2023/60 dated April 25, 2023. Prior to substitution,
clause read as under:
“Soft copy of the final SID in PDF format along with a printed copy should be filed with Board seven working days prior to the
launch of the scheme.”
7 SEBI Circular No – SEBI/IMD/CIR No.10/178129/09 dated September 29,2009
8 SEBI Circular No. IIMARP/MF/CIR/07/844/97 dated May 5, 1997.
9 Regulation 25(2) of the SEBI (Mutual Funds) Regulations, 2026
10 SEBI Circular- SEBI/IMD/CIR No. 5/126096/08 dated May 23, 2008 and SEBI Circular No.
SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021, Refer SEBI letter No. SEBI/HO/OW/IMD-II/DOF3/P/397002021
dated December 28, 2021 & SEBI email dated March 25, 2022 for Scheme Summary Document. Refer SEBI letter No.
SEBI/HO/IMD/IMDRAC-2/P/OW/2023/45312/1 dated November 10, 2023
11 SEBI Circular- SEBI/HO/IMD/IMD-I DOF2/P/CIR/2021/0560 dated April 30, 2021
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Sr. Stage Frequency of Reference date
update for update
No.
(a) Initial SID update Within next six Relevant data
months from the and information
end of the 1st half as at the end of
or 2nd half of the previous month.
financial year in
which schemes
were launched
(b) Subsequent SID Within 2 months Relevant data
update from the end of and information
the half-year as at the end of
September and
March
respectively
(c) Soft copy of updated SID shall be filed with SEBI digitally by
sending an email to the dedicated email id, i.e.
imdsidfiling@sebi.gov.in and to the respective dealing
officer within 7 calendar days.
1.2.2. 12The procedure to be followed in case of changes to the open ended
and interval scheme shall be as under:
(a) In case of change in fundamental attributes in terms of Regulation
22 (9)(c):
(i) An addendum to the existing SID shall be issued and
displayed on AMC website immediately.
(ii) SID shall be revised and updated immediately after
completion of duration of the exit option (not less than 30
calendar days from the notice date).
(iii) A notice shall be given in respect of such changes which shall
be displayed on the website of the AMC.
(b) In case of other changes:
(i) The AMC shall be required to issue an addendum and display
the same on its website immediately. The latest applicable
addendum shall be part of SID and KIM. (E.g. in case of
12 Refer SEBI letter No. IMD/DF3/OW/P/2021/32220/1 dated November 11, 2021
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changes in load structure, the addendum carrying the latest
applicable load structure shall be attached to all KIM and SID
till it is updated). Further, the account statements shall
continue to include applicable load structure.
(ii) The digital copies of SID shall have a functional website link
to the respective addendums to the SID issued after the last
update of SID.
(iii) The addendum shall be sent via email to all the
distributors/brokers/Investor Service Centre (ISC), so that the
same can be provided along with the SID and KIM till it is
updated.
(c) A copy of all changes made to the scheme shall be filed with SEBI
within 7 calendar days of the change.
1.3. Validity of SEBI Observations on SID
1.3.1. The AMCs shall file their replies to the modifications suggested by the
Board on SID as required under Regulation 25(2), if any, within six
months from the date of the letter from the Board. In case of lapse of
six-month period, the AMC shall refile the SID with the Board along with
filing fees.
1.3.2. The scheme may be launched within six months from the date of
issuance of final observations by the Board. If the AMC intends to launch
the scheme at a date later than six months, it shall refile the SID with
the Board along with the filing fees.
1.4. Standard Observations
1.4.1. AMCs shall adhere to the format of Standard Observations as
prescribed under Format No. 6A and 6B from time to time. While filing
the SID and SAI, AMCs shall clearly mention the page number of the
SID and SAI on which each standard observation has been
incorporated.
1.5. Key Information Memorandum (KIM)
1.5.1. Application forms for schemes of mutual funds shall be accompanied by
the KIM in terms of Regulation 26 and in line with the Format No. 5C.
KIM shall be printed in not less than 7-point font size with proper spacing
for easy readability.
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1.5.2. 13KIM shall be updated within two months14 from the end of each half-
year, based on the relevant data and information as at the end of
September and March and shall be filed with the Board forthwith through
electronic mode only.
1.6. Easy Availability of Offer Document15
1.6.1. Trustees and AMCs shall ensure that the SID and SAI are readily
available on the website of mutual fund and confirm the same to the
Board in the half yearly trustee report.
1.7. New Fund Offer (NFO) Period16
1.7.1. In case of an open ended and a close ended schemes (except ELSS
schemes), the NFO should be open for subscription for a minimum
period of 3 working days17 and not more than 15 calendar days.
1.7.2. The NFO period in case of ELSS schemes shall continue to be governed
by guidelines issued by Government of India.
1.7.3. Mutual Funds/AMCs are allowed to deploy the NFO proceeds in triparty
repo on Government securities or treasury bills18 before the closure of
NFO period. However, AMCs shall not charge any investment
management and advisory fees on funds so deployed during the NFO
period. The appreciation received from such investments shall be
passed on to investors. Further, in case the minimum subscription
amount is not garnered by the scheme during the NFO period, the
interest earned upon investment of NFO proceeds in aforesaid
instruments shall be returned to investors, in proportion to their
investments, along with the refund of the subscription amount.
1.7.4. The mutual fund shall allot units or refund money and dispatch
statements of accounts within 5 working days from the closure of the
NFO and all the schemes (except ELSS) shall be available for ongoing
repurchase/sale/trading within 5 working days of allotment.
1.8. Timelines related to processing of scheme related applications filed by
AMCs19
13 SEBI Circular No.SEBI/HO/IMD/IMD-I DOF2/P/CIR/2021/0560 dated April 30, 2021
14 Inserted vide SEBI Circular No. SEBI/HO/IMD/IMD-RAC-2/P/CIR/2023/000175 dated November 01, 2023. Refer SEBI letter
No. SEBI/HO/IMD/IMD-RAC-2/P/OW/2023/ 44197/1 dated November 02, 2023
15 SEBI Circular- SEBI/IMD/CIR No. 5/126096/08 dated May 23, 2008
16 SEBI Circular no MFD/Cir. No 9/120/2000 dated November 24, 2000. SEBI Circular No.SEBI/IMD/CIR No. 18/198647/2010
dated March 15, 2010.
17 Inserted vide SEBI Circular No. SEBI/HO/IMD/IMD-RAC-2/P/CIR/2023/60 dated April 25, 2023
18 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2016/42 dated March 18, 2016 and SEBI circular No.
SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021.
19 SEBI Circular No. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2021/603 dated July 23, 2021
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1.8.1. The application filed by AMCs for the following matters may be deemed
to be taken on record in case no modifications are suggested or no
queries are raised by the Board within 21 working days:
(a) Change in the Fundamental Attributes of a scheme
(b) Merger/Consolidation of Schemes
(c) Rollover of Close-ended schemes
(d) Conversion of Close-ended scheme to Open ended schemes.
1.8.2. In respect of applications filed by AMCs under Regulation 21(b), no
objection shall be deemed to be communicated in case no modifications
are suggested or no queries are raised by the Board within 21 working
days.
1.8.3. The timelines mentioned at Paragraph 1.8.1 and 1.8.2 above shall
generally be adhered to -
(a) provided the application is complete in all respects and in
compliance with all the relevant regulations and circulars issued by
the Board.
(b) except in cases where subject matter of approval requires a policy
view to be taken or presents a unique situation which requires
wider consultation and deliberation.
1.9. Fundamental Attributes20
1.9.1. The "fundamental attributes"21 of a scheme are as follows:
(a) Type of scheme
(i) Open ended/Close ended/Interval scheme
(ii) Equity Schemes, Debt Schemes, Hybrid Schemes, and
Other Schemes22
(b) Investment Objective(s)
(i) Main Objective - Growth/Income/Both.
(ii) 23Investment pattern - The tentative portfolio break-up of
Equity, Debt, Money Market Instruments, other permitted
securities and such other securities as may be permitted by
the Board from time to time with minimum and maximum
20 SEBI Circular No- IIMARP/MF/CIR/01/294/98 dated February 4, 1998, Refer SEBI letter No.
SEBI/HO/OW/IMD/RAC2/P/2022/511371/1 dated October 04, 2022
21Regulation 22(9)(c) of SEBI (Mutual Funds) Regulations, 2026
22 SEBI/HO/IMD/DF3/CIR/P/2017/114 dated October 06, 2017 and HO/24/13/15(2)2026-IMD-RAC4/I/5764/2026 dated
February 26, 2026
23 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021
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asset allocation, while retaining the option to alter the asset
allocation for a short term period on defensive
considerations.
(c) Terms of Issue
(i) Liquidity provisions such as listing, repurchase, redemption.
(ii) Aggregate fees and expenses charged to the scheme.
(iii) Any safety net provided.
1.9.2. 24Comments from the Board for change in Fundamental Attributes:
In addition to the conditions specified under Regulation 22 (9)(c) for
bringing change in the fundamental attributes of any scheme, trustees
shall seek comments of the Board before bringing such change(s).
24 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021
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CHAPTER 2: REGISTRATION
2.1. Online Registration Mechanism for Mutual Funds25
2.1.1. All applications for registration of a Mutual Fund is required to be made
through SEBI Intermediary Portal (https://siportal.sebi.gov.in) (SI Portal)
only.
2.1.2. In case of any queries/ clarifications with regard to the SI Portal,
intermediaries may contact on 022-26449364 or may write to
portalhelp@sebi.gov.in.
2.1.3. Registration related formats including application formats and format for
certificate of registration are provided under Format No. 1.
2.2. Acquisition of an AMC
2.2.1. In case of Route 1 under Regulation 5(1)(g), the following has been
decided:
(a) In case of change in control of an existing AMC due to acquisition
of shares, the cost of acquisition may also be funded out of
borrowings by a sponsor but in such cases, the sponsor shall have
sufficient other assets to encumber for borrowings other than the
shares of the proposed AMC.
(b) The sponsor’s stake in the proposed AMC shall be free from any
encumbrance at all times.
2.2.2. In case of Route 2 under Regulation 5 (1)(g), in addition to the conditions
specified for Route 1, it has been decided that the minimum incremental
capital contribution required in the AMC shall not be funded through
borrowings and shall be funded only out of the net worth of the acquirer.
2.3. Pooled Investment Vehicle as sponsor of Mutual Funds
In terms of Regulation 5 (1)(h), the following has been decided:
2.3.1. Among the pooled investment vehicles, only the private equity funds
(PEs) can sponsor a Mutual Fund. Such PEs shall comply with clauses
(a) to (g) of Route 2 under Regulation 5 (1).
2.3.2. For any PE to qualify as a Mutual Fund sponsor, the following criteria
shall be applicable:
(a) The applicant PE (scheme/ fund) shall itself be a body corporate
or, a body corporate set up by a PE, in India or abroad.
25 SEBI Circular No. SEBI/HO/IMD/DF3/CIR/P/2017/52 dated June 01, 2017
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(b) The applicant PE or its manager shall have a minimum of five
years of experience in the capacity of fund/investment manager,
investing in the financial sector, where it should have managed
committed and drawn-down capital of not less than INR 5,000
crore as on the date of its application made to the Board.
2.3.3. The following additional safeguards shall also be applicable for PEs
acting as Mutual Fund sponsor:
(a) There shall be no off-market transactions between the schemes of
the Mutual Fund and
(i) Sponsor PE; or
(ii) Schemes/ Funds managed by the manager of the sponsor
PE; or
(iii) Investee Companies of schemes/ funds of sponsor PE,
where it holds more than 10% stake; or has a board
representation or a right to nominate Board representation.
(b) In terms of Route 2 under Regulation 5(1)(f), the lock-in period of
5 years shall continue in case of transfer of sponsorship to any
other entity within the PE group provided all the criteria required
for a PE to act as sponsor are met by the transferee PE as well.
(c) The said lock in period of 5 years shall also be applicable to the
shareholding of PE in the corporate entity, which is sponsoring the
Mutual Fund.
(d) The experience, track record and eligibility regarding the fit and
proper criteria of any applicant PE to become sponsor of a Mutual
Fund shall be ascertained through its conduct in the respective
home jurisdiction.
2.4. Disassociation and re-association of sponsor
2.4.1. Reduction of stake and disassociation of sponsor
(a) In terms of Regulation 7(1) and 7(2)(a), a sponsor is permitted to
voluntarily reduce its stake in an AMC and allow such an AMC to
become a “self- sponsored AMC”, subject to fulfilling the following
conditions:
(i) The AMC should have been carrying on business in financial
services for a period of not less than 5 years;
(ii) The AMC should have positive net worth in all the
immediately preceding five years;
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(iii) Net profit of the AMC after providing for depreciation, interest
and tax in each of the immediately preceding five years and
average net annual profit after providing for depreciation,
interest and tax during the immediately preceding 5 years
should be at least INR 10 crore.
(b) Any sponsor proposing to disassociate should have been a
sponsor of the concerned Mutual Fund for at least 5 years before
the proposed date of disassociation;
(c) The shareholding proposed to be reduced by a sponsor shall not
be under any encumbrance or lock-in.
(d) Any sponsor proposing to disassociate may undertake to reduce
shareholding below 10% from the proposed date of disassociation
as per the following timelines:
(i) Within a period of 5 years in case of listed AMCs.
(ii) Within a period of 3 years in case of unlisted AMCs.
(iii) During the above period, the obligations of an outgoing
sponsor shall be as per the applicable regulatory framework
for a sponsor.
(iv) The sponsor shall commit to a graded stepwise reduction
over the applicable time period.
(e) Post disassociation of any sponsor from an AMC, all the
shareholders of such AMC shall be classified as “financial
investors” and there shall be no sponsor for such AMC. Further,
the maximum shareholding of any such financial investor shall be
less than 10%.
(f) Any sponsor proposing to disassociate itself shall undertake to
honour all the obligations applicable to it regarding Guaranteed
Returns, as on the proposed date of disassociation.
(g) A self- sponsored AMC shall maintain the minimum net worth
requirement as per the MF Regulations on a continuous basis.
(h) The statutory auditor of a Mutual Fund shall submit a compliance
report on the fulfilment of eligibility criteria by a self- sponsored
AMC, as defined at Paragraph 2.4.1(a) above on an annual basis.
The trustees and Board of a self- sponsored AMC shall provide
compliance status to the Board in the half yearly and quarterly
compliance reports furnished by them respectively.
(i) The constitution of trustee company of a self- sponsored AMC shall
be as under:
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(i) For trustee company of a MF with an unlisted AMC, the
shareholding of trustee company shall replicate the
shareholding of the AMC at all times.
(ii) For trustee companies of a MF with a listed AMC, the
shareholding of financial investors in the trustee company
shall replicate their shareholding in the AMC. Further, the
shareholding in the trustee company that is equivalent to the
public shareholding in the AMC, shall be held with a trust
whose beneficial owner shall be the erstwhile sponsor with
Independent directors of the trustee company as its trustees.
(j) In terms of Regulation 9(2), it has been decided that upon
disassociation of the sponsor, the largest financial investor shall
be the signatory to the trust deed instead of the sponsor.
2.4.2. Re- Association of the Sponsor(s)
(a) In terms of Regulation 7(2)(b), read with Paragraph 2.4.1 above,
in case the AMC fails to meet the conditions specified at Paragraph
2.4.1.(a) above, a disassociated sponsor and/or any new entity
can become sponsor of a Mutual Fund subject to the following
conditions:
(i) A cure period of one year shall be provided within which, the
AMC shall be required to meet the criteria for self-sponsored
AMCs.
(ii) If even after the cure period, the AMC fails to meet the
conditions for self-sponsored AMCs, then either the
disassociated sponsor or any new entity shall become
sponsor of the concerned Mutual Fund.
(iii) The proposed sponsor shall meet all the requirements and
obligations specified in the MF Regulations pertaining to the
sponsors and shall follow due process of obtaining approval
as a sponsor from the Board.
(b) In such cases, an exit option shall be provided to the unitholders
of the existing schemes of the concerned Mutual Fund, without any
exit load.
2.5. 26Procedure for change in control of AMC:
26 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021, Refer SEBI letter No.
SEBI/HO/OW/IMD/RAC2/P/2022/51980/1 dated October 12, 2022, Refer SEBI letter No. SEBI/HO/OW/IMD/RAC2/P/2022/
58081/1 dated November 16, 2022
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2.5.1. No change in control of the AMC, directly or indirectly, can be made
unless the conditions specified under Regulation 17(c) are complied
with.
2.5.2. In terms of Regulation 17(c)(iv), the unitholders shall be given an option
to exit at the prevailing Net Asset Value (NAV) without any exit load
within a time period not less than 15 calendar days from the date of
communication, and in case of change in control resulting in
consolidation or merger of schemes, the exit option shall be for a time
period not less than 30 calendar days from the date of communication27.
In case of change in control of AMC pursuant to
merger/takeover/induction of new sponsor/dilution of shareholding by
existing shareholders, AMCs shall adhere to the format of letter to
unitholders as prescribed under Format No. 9E.28
2.5.3. New Sponsor(s)- In case the applicant proposing to acquire control of
an AMC is not an existing sponsor of a mutual fund registered with the
Board, it shall apply to the Board, seeking approval for acquiring such
control. The process of making such application is same as application
for registration under the MF Regulations. The procedure for registration
as a Mutual Fund is provided on the SEBI website under the heading
"How to get registered as a mutual fund" in the “Mutual Fund” section.
2.5.4. Undertakings by new Trustee(s)/ Sponsor(s)- In case of new
sponsor(s) or in case of taking over of the schemes by an existing
mutual fund, the following undertakings are required to be submitted to
the Board and to the unitholders:
(a) Taking full responsibility of the management and the
administration of the schemes including the matters relating to the
reconciliation of accounts (as if the schemes had been floated by
the new trustees on the date of taking over).
(b) Assumption of the trusteeship of the assets and liabilities of the
schemes including outstanding borrowings, unclaimed dividends
and unclaimed redemptions, if any.
(c) Assuming all responsibilities and obligations relating to the
investor grievances, if any, in respect of the schemes taken over,
in accordance with and pursuant to the MF Regulations and
various circulars issued thereunder.
2.5.5. Disclosures to Unitholders- While seeking the approval of the Board
for change in the control of the AMC, the mutual fund handing over the
control to another person, shall also file the draft letter / email to be sent
27 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-2/P/CIR/2023/142 dated August 11, 2023
28 SEBI email dated August 12, 2024
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to the unitholders. The letter / email to the unitholders shall be as per
the Format No. 9E.
2.5.6. Revision of all Standard Offer Documents- The information given in
all the offer documents of existing schemes shall be revised and
updated pursuant to the change in control of the AMC. Such addendum
shall also be filed with the Board, as required under the Regulations and
various circulars issued thereunder.
2.5.7. Other Situations- In case of any other situation such as an indirect
change in control of the AMC or an indirect change in the promoters of
the sponsor(s), which are beyond the control of the sponsor(s), etc., the
mutual fund shall provide the full details/ information to the Board for
further course of action.
2.5.8. Change in control of the AMC involving scheme of arrangement
under Companies Act, 201329- In cases where the change in control
of an AMC involves scheme of arrangement which needs sanction of
National Company Law Tribunal (“NCLT”) in terms of the provisions of
the Companies Act, 2013, following has been decided:
(a) The application seeking approval for the proposed change in
control of the AMC under Regulation 17(c) shall be filed with the
Board prior to filing the application with the NCLT;
(b) Upon being satisfied with compliance of the applicable regulatory
requirements, an in-principle approval shall be granted by the
Board;
(c) The validity of such in-principle approval shall be three months
from the date of issuance, within which the relevant application
shall be made to NCLT;
(d) Within 15 calendar days from the date of order of NCLT, applicant
shall submit the following documents to the Board for final
approval:
(i) Application for the final approval;
(ii) Copy of the NCLT Order approving the scheme;
(iii) Copy of the approved scheme;
(iv) Statement explaining modifications, if any, in the approved
scheme vis-à-vis the draft scheme and the reasons for the
same; and
29 SEBI Circular No. SEBI/HO/IMD/IMD-I DOF5/P/CIR/2022/10 dated January 31, 2022
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(v) Details of compliance with the conditions/ observations
mentioned in the in-principle approval granted by the Board.
2.6. Format for Net worth computation
2.6.1. “Net worth” is defined under Regulation 2(ll). Further, the net worth
Certificate shall be provided by the applicant in the following format:
Amount (in INR
Particulars
crores)
Paid-up capital
Add: Share Premium
Add: Free reserves of the company (excluding reserves
created out of revaluation)
Less: miscellaneous expenditure to the extent not written-
off or adjusted or deferred revenue expenditure
Less: accumulated losses, if any
Less: intangible assets, if any
Less: Minimum Capital Adequacy / Net worth requirement
for any other activity undertaken under other SEBI
Regulations
Total Net worth for the FY
Profit After Tax for the FY
2.6.2. Deployment of liquid net worth by AMC
(a) In terms of Regulation 5(1)(e), AMCs shall deploy the minimum net
worth required, as applicable, in the following instruments:
(i) Cash, money market instruments, Government Securities,
Treasury bills, Repo on Government securities, or in listed
AAA rated debt securities without bespoke
structures/structured obligations, credit enhancements or
embedded options or any other structure/ feature which
increase the liquidity risk of the instrument on a continuous
basis and such investments shall be unencumbered.
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(ii) Liquid schemes or overnight schemes or such other mutual
fund schemes that predominantly invest in instruments
specified in (a) above.
(b) Investment by AMC as per Paragraph 7.13 of this Master Circular
on “Alignment of interest of Asset Management Companies
(AMCs) with the Unitholders of the Mutual Fund Schemes” may be
treated under liquid net worth. However, any investment made in
Mutual Fund schemes like Retirement scheme, children oriented
scheme and ELSS, with a specified lock in either through Income
Tax mandate or as per categorization of schemes guidelines in
Master Circular on MFs may be excluded during its lock in phase.
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CHAPTER 3: CONVERSION & CONSOLIDATION OF SCHEMES, TYPES
OF MUTUAL FUND PLANS AND CATEGORIZATION &
RATIONALIZATION OF MUTUAL FUND SCHEMES
PART I – CONVERSION OF SCHEMES
3.1. Conversion of Close Ended Scheme(s) to Open Ended Scheme(s)30
3.1.1. In terms of Regulation 30(2), the following have been clarified:
(a) Since the scheme(s) would reopen for fresh subscriptions,
disclosures contained in the SID shall be revised and a copy of the
draft SID shall be filed with the Board as required under Regulation
24(1) along with filing fees prescribed under Regulation 24(3).
(b) A draft of the communication to be sent to unit holders shall be
submitted to the Board, which shall include the following:
(i) Latest portfolio of the scheme(s) as per the Format No. 4C.
(ii) Details of the financial performance of the scheme(s) since
inception in the format prescribed in SID (Format No. 5A)
along with comparisons with appropriate benchmark(s).
(iii) The addendum to the SID detailing the modifications (if any)
made to the scheme(s).
3.1.2. The letter to unit holders and revised SID (if any) shall be issued only
after the final observations as communicated by the Board in terms of
Regulation 25(2) have been incorporated therein and final copies of the
same have been filed with the Board.
3.1.3. Unit holders shall be given at least 30 calendar days to express their
consent in writing. The units of unitholders who have not provide such
written consent shall be automatically redeemed in full at the net asset
value prevailing on the maturity date.
30 SEBI Circular No. MFD/CIR No.22/2311/03 dated January 30, 2003.
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PART II – CONSOLIDATION OF SCHEMES
3.2. Consolidation of Schemes31
3.2.1. Any consolidation or merger of Mutual Fund schemes shall be treated
as a change in the fundamental attributes of the related schemes and
AMCs shall be required to comply with the relevant MF Regulations. In
this regard, the AMC shall ensure the following:
(a) The proposal and modalities of the consolidation or merger shall
be approved by the Board of the AMC and Trustee(s), after
ensuring that the interest of unit holders under all the concerned
schemes have been protected in the said proposal.
(b) Subsequent to approval by the Board of the AMC and Trustee(s),
AMCs shall file the proposal with the Board, along with the draft
SID (updated in line with the requirements for change in
fundamental attribute of the scheme), requisite fees (if a new
scheme emerges after such consolidation or merger) and the draft
letter, prepared as per specified format, to be issued to the unit
holders of all the concerned schemes.
(c) The Board shall communicate its observations on the proposal
filed by AMCs within the time period prescribed. The letter to unit
holders shall be issued only after the final observations
communicated by the Board have been incorporated and final
copies of the same have been filed with the Board.
3.2.2. Maintenance of Records: AMC(s) shall maintain records of dispatch of
the letters to the unit holders and the responses received from them. A
report shall be filed with the Board within 21 calendar days from the date
of closure of the exit option32. The report shall provide the following
information:
(a) Total number of unit holders in the schemes and their net assets.
(b) Number of unit holders who opted to exit along with net assets held
by them.
(c) Number of unit holders and net assets in the consolidated scheme.
3.2.3. Merger or consolidation shall not be seen as change in fundamental
attribute of the surviving scheme if the following conditions are met33:
31 SEBI Circular No. SEBI/MFD/CIR No.5/12031/03 dated June 23, 2003.
32 SEBI Circular No- SEBI / IMD / CIR No 14 / 187175/ 2009 dated December 15,2009
33 SEBI Circular No- Cir / IMD / DF / 15/ 2010 dated October 22, 2010
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(a) Fundamental attributes34 of the surviving scheme do not change.
The ‘surviving scheme’ means the scheme which remains in
existence after the merger.
(b) Mutual Funds are able to demonstrate that the circumstances
merit merger or consolidation of schemes and the interest of the
unit holders of surviving scheme is not adversely affected.
34 SEBI Circular No-IIMARP/MF/CIR/01/294/98 dated February 4, 1998
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PART III – TYPES OF MUTUAL FUND PLANS35
3.3. Single Plan36
3.3.1. Mutual funds/AMCs shall launch schemes under a single plan and
ensure that all new investors are subject to single expense structure.
3.3.2. Existing schemes with multiple plans based on the amount of
investment (i.e. retail, institutional, super-institutional, etc.) shall accept
fresh subscriptions only under one plan.
3.3.3. Other plans will continue till the existing investors remain invested in the
plan.
3.4. Direct Plan37
3.4.1. Mutual funds/AMCs shall provide a separate plan for direct investments,
i.e., investments not routed through a distributor, in existing as well as
new schemes.
3.4.2. Such separate plan shall have a lower expense ratio as no distribution
commission is paid under such plan. Such plan shall also have a
separate NAV.
3.5. Launch of Additional Plans
3.5.1. Additional plans sought to be launched under existing open ended
schemes which differ substantially from that scheme in terms of portfolio
or other characteristics shall be launched as separate schemes in
accordance with the regulatory provisions.
3.5.2. However, plan(s) which are consistent with the characteristics of the
scheme may be launched as additional plans as part of existing
schemes by issuing an addendum. Such proposal should be approved
by the Board(s) of AMC and Trustees. In this regard following has been
decided:
(a) The addendum shall contain information pertaining to salient
features like applicable entry/exit loads, expenses or such other
details which in the opinion of the AMC/ Trustees is material. The
addendum shall be filed with the Board 21 calendar days in
advance of opening of plan(s).
(b) AMC(s) shall publish an advertisement or issue a press release at
the time of launch of such additional plan(s).
3.6. Interval Schemes/Plans
35 SEBI Circular No. SEBI / IMD / CIR No 14 / 187175/ 2009 dated December 15, 2009
36 SEBI Circular No. CIR/IMD/DF/21/2012 dated September 13, 2012
37 SEBI Circular No. CIR/IMD/DF/21/2012 dated September 13, 2012, Refer SEBI Email dated April 28, 2015
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3.6.1. Interval schemes are schemes where both subscription and redemption
may be made to and from the scheme during a specific period (known
as specified transaction period) and the repurchase of units is permitted
on all business days subject to applicable loads. However, no loads
shall be charged where redemption is made during the specified
transaction period.
3.6.2. For all interval schemes/plans:
(a) The units shall be mandatorily listed.
(b) No redemption/repurchase of units shall be allowed except during
the specified transaction period. The specified transaction period
shall be of minimum 2 working days.
(c) Minimum duration of an interval period in an interval scheme/plan
shall be 15 calendar days.
(d) Investments shall be permitted only in such securities which
mature on or before the opening of the immediately following
specified transaction period.
Explanation: In case of securities with put and call options, the
residual time for exercising the put option of the securities shall not
be beyond the opening of the immediately following transaction
period
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PART IV – CATEGORIZATION AND RATIONALIZATION OF MUTUAL FUND
SCHEMES38
In order to clearly differentiate the schemes launched by a Mutual Fund in
terms of asset allocation, investment strategy etc. and to bring uniformity in
the characteristics of similar type of schemes across Mutual Funds, it has
been decided to standardize the scheme categories and characteristics of
each category as given below:
3.7. Categories of Schemes, Scheme Characteristics and Type of Scheme
(Uniform Description of Schemes)39:
3.7.1. The Schemes are broadly classified as under:
(a) Equity Scheme: Mutual Fund scheme predominantly investing in
equity and equity related instruments;
(b) Debt Scheme: Mutual Fund scheme predominantly investing in
debt and debt related instruments;
(c) Hybrid Scheme: Mutual Fund scheme investing in a mix of asset
class i.e. equity, debt, InvITs and commodities related instruments
as permitted by the Board
(d) Life Cycle Funds
(e) Other Schemes:
(i) Fund of Fund Schemes
(ii) Passive Schemes for e.g. Index Funds/ ETFs
3.7.2. ‘Residual portion’ mentioned in this section refers to the part of a
scheme’s corpus not invested in its main, core asset classes as
provided in the scheme characteristics.
38 SEBI Circular No. HO/24/13/15(2)2026-IMD-RAC4/I/5764/2026 dated February 26, 2026, SEBI Circular No.
SEBI/HO/IMD/DF3/CIR/P/2017/114 dated October 06, 2017, Refer SEBI letter No. SEBI/HO/OW/IMD-II/DOF3/P/5249/2022
dated February 08, 2022, Refer SEBI letter No. SEBI/HO/OW/IMD-II/DOF3/P/25379/2022 dated June 21, 2022. Refer SEBI
letter No. SEBI/HO/IMD/IMD-RAC-2/P/OW/2023/40331/1 dated September 26, 2023 & Refer SEBI letter No.
SEBI/HO/IMD/IMD-SEC-3/P/OW/2023/ 43062/1 dated October 19, 2023.
39 Refer SEBI letter No. SEBI/HO/OW/IMD-II/DOF3/P/25096/2022 dated June 17, 2022
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3.8. The details of the scheme categories
3.8.1. Equity Schemes:
Sr. Category Scheme Characteristics Type of scheme (uniform
No. of description of scheme)
Schemes
1 Multi Cap Minimum investment in equity & An open ended equity
Fund equity related instruments- 75% of scheme investing across
total assets in the following large cap, mid cap, small
manner:40 cap stocks
a) Minimum investment in equity &
equity related instruments of
large cap companies - 25% of
total assets;
b) Minimum investment in equity &
equity related instruments of mid
cap companies - 25% of total
assets;
c) Minimum investment in equity &
equity related instruments of
small cap companies - 25% of
total assets
2 Large Cap Minimum investment in equity & An open ended equity
Fund equity related instruments of large scheme predominantly
cap companies- 80% of total assets investing in large cap stocks
3 Large & Minimum investment in equity & An open ended equity
Mid Cap equity related instruments of large scheme investing in both
Fund cap companies- 35% of total assets large cap and mid cap
stocks.
Minimum investment in equity &
equity related instruments of mid
cap stocks- 35% of total assets
40 SEBI Circular No. SEBI/HO/IMD/DF3/CIR/P/2020/172 dated September 11, 2020
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4 Mid Cap Minimum investment in equity & An open ended equity
Fund equity related instruments of mid scheme predominantly
cap companies- 65% of total assets investing in mid cap stocks
5 Small cap Minimum investment in equity & An open ended equity
Fund equity related instruments of small scheme predominantly
cap companies- 65% of total assets investing in small cap stocks
6 Flexi Cap Minimum Investment in equity & An open ended dynamic
Fund41 equity related instruments – 65% of equity scheme investing
total assets across large cap, mid cap,
small cap stocks
7 Dividend Scheme shall predominantly An open ended equity
Yield Fund invest in dividend yielding stocks. scheme predominantly
investing in dividend
yielding stocks
Minimum investment in equity &
equity related instruments- 80% of
total assets
8 Value Scheme shall follow a value An open ended equity
Fund investment strategy. scheme following a value
investment strategy
Minimum investment in equity &
equity related instruments - 80% of
total assets
9 Contra Scheme shall follow a contrarian An open ended equity
Fund investment strategy. scheme following contrarian
investment strategy
Minimum investment in equity &
equity related instruments - 80% of
total assets
10 Focused A scheme focused on the number of An open ended equity
Fund stocks (maximum 30) scheme investing in
maximum 30 stocks
Minimum investment in equity &
(mention where the scheme
equity related instruments - 80% of
intends to focus, viz., multi
total assets
cap, large cap, mid cap,
small cap)
41 SEBI Circular No. SEBI/HO/IMD/DF3/CIR/P/2020/228 dated November 06, 2020
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11 Sectoral Minimum investment in equity & An open ended equity
Fund equity related instruments of a scheme investing in __
particular sector- 80% of total sector (mention the specific
assets sector)
12 Thematic Minimum investment in equity &
Fund42 equity related instruments of a
An open ended equity
particular theme- 80% of total
scheme investing in __
assets.
theme (mention the specific
A theme may be a combination of theme)
two or more sectors
13 ELSS43- Minimum investment in equity & An open ended scheme with
Tax Saver equity related instruments - 80% of attributes in accordance
Fund total assets with Equity Linked
Saving Scheme, 2005
notified by Ministry of
Finance
(a) For definition of large cap, mid cap and small cap, Paragraph 3.9
of Master Circular shall be referred.
(b) For ESG funds, Paragraph 4.6 of this Master Circular shall be
referred.
(c) In the equity category schemes, Mutual Funds may invest residual
portion in equity, money market instruments and other liquid
instruments, gold and silver instruments as permitted by the Board
and in InvITs, subject to the ceilings laid out in MF Regulations with
respect to the respective asset class.
(d) Mutual Funds shall be permitted to offer both Value and Contra
funds subject to the condition that scheme portfolio overlap
between the two schemes shall not be more than 50%.
(e) For any scheme offering in sectoral/thematic equity category,
Mutual Funds shall ensure that no more than 50% of the schemes
portfolios would overlap with other equity schemes in
sectoral/thematic category and other equity schemes categories
except for large cap scheme.
(f) The overlap condition shall be computed on a quarterly basis using
the daily portfolio overlap values i.e. the average of daily portfolio
42 Refer SEBI letter No. SEBI/H0/0W/IMD-II/DOF3/P/24098/2022 dated June 10, 2022
43 Refer SEBI letter No. SEBI/HO/IMD- POD-2/P/OW/2023/1114/1 dated January 10, 2023
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overlap values over a quarter. Detailed methodology for computing
portfolio overlap is provided at Annexure 1A to this circular
(g) Existing sectoral/thematic schemes shall ensure compliance with
regard to portfolio overlap limits within 3 years from the date of this
circular. Schemes unable to meet the portfolio overlap criteria after
3 years shall be mandatorily merged with other schemes as per
applicable provisions.
(h) In order to realign the portfolio in terms of the limit as mentioned at
Paragraph (e) above, the following glide path may be adopted by
mutual funds:
Period Realignment expected
Year 1 35% of the excess overlap
Year 2 Additional 35%
Year 3 Remaining 30%
(i) Mutual Funds shall launch sectoral/thematic funds as per the list
of sectors/themes as published and updated by AMFI in
consultation with the Board on half yearly basis.
3.8.2. Debt Schemes
Sr. Category of Scheme Characteristics Type of scheme (uniform
No. Schemes description of scheme)
1 Overnight Investment in overnight securities An open ended debt
Fund** having maturity of 1 day scheme investing in
overnight securities
Overnight funds can deploy,
not exceeding, 5% of the net
assets of the scheme in G-secs
and/or T-bills with a residual
maturity of upto 30 calendar days
for the purpose of placing the
same as margin and collateral
for certain transactions.
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2 Liquid Fund $ Investment in only Debt and An open ended liquid
** money market securities with scheme
maturity of upto 91 calendar days
3 Ultra Short Investment in Debt & Money An open ended ultra-short
Term Fund Market instruments such that the term debt scheme investing
Macaulay duration of the portfolio in instruments such that the
is between Macaulay duration of the
3 months to 6 months portfolio is between 3
months to 6 months
4 Ultra Short to Investment in Debt & Money An open ended debt
Short Term Market instruments such that the scheme investing in
Fund Macaulay duration of the portfolio instruments such that the
is between Macaulay duration of the
6 months to 12 months portfolio is between 6
months to 12 months
5 Money Market Investment in Money Market An open ended debt
Fund instruments having maturity up to scheme investing in money
1 year market instruments
6 Short Term Investment in Debt & Money An open ended short term
Fund Market instruments such that the debt scheme investing in
Macaulay duration of the portfolio instruments such that the
is between Macaulay duration of the
1 year to 3 years portfolio is between 1 year
to 3 years
7 Medium Term Investment in Debt & Money An open ended medium
Fund Market instruments such that the term debt scheme investing
Macaulay duration of the portfolio in instruments such that the
is between Macaulay duration of the
3 years to 4 years. portfolio is between 3 years
to 4 years
Portfolio Macaulay duration under
anticipated adverse situation is 1
year to 4 years
8 Medium to Investment in Debt & Money An open ended medium
Long Market instruments such that the term debt scheme investing
Term Fund Macaulay duration of the portfolio in instruments such that the
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is between Macaulay duration of the
4 to 7 years. portfolio is between 4 years
to 7 years
Portfolio Macaulay duration under
anticipated adverse situation is 1
year to 7 years
9 Long Term Investment in Debt & Money An open ended debt
Fund Market Instruments such that the scheme investing in
Macaulay duration of the portfolio instruments such that the
is greater Macaulay duration of the
than 7 years portfolio is greater than 7
years
10 Dynamic Term Investment across duration An open ended dynamic
Fund debt scheme investing
across duration
11 Corporate Minimum investment in corporate An open ended debt
Bond bonds- 80% of total assets (only in scheme predominantly
Fund AA+ and above rated corporate investing in AA+ and above
bonds) @ rated corporate bonds
12 Credit Risk Minimum investment in corporate An open ended debt
Fund bonds- 65% of total assets (only in scheme predominantly
AA and below rated corporate investing in AA and below
bonds) @ rated
corporate bonds (excluding
AA+ rated corporate bonds)
13 Banking and Minimum investment in Debt An open ended debt
PSU Debt instruments of banks, Public scheme predominantly
Fund Sector Undertakings, Public investing in Debt
Financial Institutions and instruments of banks,
Municipal Bonds - 80% of total Public Sector
assets @ Undertakings, Public
Financial Institutions and
Municipal Bonds
14 Gilt Fund Minimum investment in G secs- An open ended debt
80% of total assets (across scheme investing in
maturity) government securities
across maturity
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15 10 year Minimum investment in G secs- An open ended debt
Constant 80% of total assets such that the scheme investing in
Maturity Gilt Macaulay duration of the portfolio government securities
Fund is equal to 10 years having a constant
maturity of 10 years
16 Floating Minimum investment in floating An open ended debt
Interest Rates rate instruments (including fixed scheme predominantly
Fund rate instruments converted to investing in floating rate
floating rate exposures using instruments (including fixed
swaps/derivatives)- 65% of total rate instruments converted
assets @ to floating rate exposures
using swaps/derivatives)
17 Sectoral Fund Minimum investment in debt & An open ended debt
debt related instruments of a scheme investing in __
particular sector across duration sector (mention the specific
(only in AA+ and above rated sector)
corporate bonds)- 80% of total
assets
Sectoral Debt Funds may be
launched in following sectors:
Financial Services, Energy,
Infrastructure, Housing, Real
Estate.
**Provision as mentioned at Paragraph 9.4.3 of this Master Circular shall be followed
for Uniform cut-off timings for applicability of Net Asset Value in respect of Liquid
Fund and Overnight Fund.
$ All provisions mentioned at Paragraph 9.4.1.c and 13.2.1 of this Master Circular in
respect of liquid schemes shall be applicable.
Concept of Macaulay Duration shall be explained in the SID. It is clarified that
Macaulay duration shall be mentioned at portfolio level.
@ For asset allocation limits considering minimum liquid assets requirement, refer
Paragraph 5.7 of this Master Circular. For exclusion of investment in units of CDMDF
from asset allocation limits, please refer Paragraph 3.12 of this Master Circular.
(a) With respect to the Medium Term Fund and Medium to Long Term
Fund, the characteristics of the scheme shall remain the same
under normal circumstances. However, the fund manager, in the
interest of investors, may reduce the portfolio duration of the
aforementioned schemes up to one year, in case he has a view on
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interest rate movements in light of anticipated adverse situation.
The AMC shall be required to mention its asset allocation under
such adverse situation in its SIDs.
(b) Whenever the portfolio duration is reduced below the specified
floors of 3 years and 4 years in respect of Medium Term Fund and
Medium to Long Term Fund respectively, the AMC shall be
required to record the reasons for the same with adequate
justification and maintain the same for inspection. The written
justifications shall be placed before the Trustees in the subsequent
Trustee meeting. Further, the Trustees shall also review the
portfolio and report the same in their HYTR to the Board.
(c) Sectoral debt scheme shall be offered after ensuring that there is
sufficient availability of investment grade paper in market for the
sectors in which sectoral debt fund is offered by the respective
AMC.
(d) Sectoral exposure limits as outlined in item No. 8 under Paragraph
13.1 of this Master Circular shall not be applicable to the sectoral
debt funds.
(e) Mutual Funds may invest the residual portion of debt category
schemes in InvITs except for Overnight Fund, Liquid Fund, Ultra-
Short Term Fund, Ultra Short to Short Term Fund and Money
Market Fund, subject to the ceilings laid out in Paragraph 13.13.5
of this Master Circular.
3.8.3. Hybrid Schemes
Sr. Category of Scheme Characteristics Type of scheme (uniform
No. Schemes description of scheme)
1 Conservative Investment in equity & equity An open ended hybrid
Hybrid Fund related instruments- between scheme investing
10% and 25% of total assets; predominantly in debt
instruments
Investment in Debt
instruments- between 75% and
90% of total assets
2 Balanced Equity & Equity related An open ended balanced
Hybrid instruments- between 40% and scheme investing only in
Fund 60% of total assets; equity and debt instruments.
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No Arbitrage is permitted in
this scheme
Debt instruments- between
40% and 60% of total assets
No Arbitrage would be
permitted in this scheme
3 Aggressive Equity & Equity related An open ended hybrid
Hybrid Fund instruments- between 65% and scheme investing
80% of total assets; predominantly in
equity and equity related
instruments
Debt instruments- between
20% and 35% of total assets
4 Balanced Investment in equity/ debt that An open ended dynamic
Advantage is managed dynamically asset allocation fund
Fund / investing in debt and equity
instruments only
Dynamic
Asset
Allocation
Fund
5 Multi Asset Invests in at least three asset An open ended scheme
Allocation classes with a minimum
investing in _ , _ ,___
Fund allocation of at least 10% each
(mention the three different
in all three asset classes
asset
classes)
6 Arbitrage Scheme following arbitrage An open ended scheme
Fund strategy. investing in arbitrage
opportunities.
Minimum investment in equity
& equity related instruments-
65% of total assets.
No investment in InvITs is
Asset allocation in case permitted
of defensive consideration
shall be stated in the SID.
Exposure in debt instruments in
CDs, government securities
with maturities upto 1 year,
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mutual fund units of liquid,
money market or schemes
having Macaulay duration less
than 1 year for meeting liquidity
and margin requirements.
7 Equity Minimum investment in equity An open ended scheme
Savings Fund & equity related instruments- investing in equity, arbitrage
65% of total assets. and debt
Net Long Equity Exposure-
15%- 40% of total assets.
Minimum investment in debt-
10% of total assets.
Minimum Arbitrage exposure
has to be stated in the SID.
Minimum hedged & unhedged
exposure to be stated in the
SID.
Asset Allocation under
defensive considerations may
also be stated in the Offer
Document
(a) In the hybrid category schemes, Mutual Funds may invest residual
portion in InvITs (except for arbitrage funds), ETCDs, Gold ETFs
and Silver ETFs, subject to the ceilings laid out in MF Regulations
w.r.t the respective asset class.
(b) Foreign securities will not be treated as a separate asset class.
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3.8.4. Life Cycle Funds
Sr. Category Scheme Characteristics Type of scheme
No of (uniform
Schemes description of
scheme)
1 Life Cycle Scheme following glide path An open ended fund
Funds strategy based investing with attributes of pre-
across various asset classes determined maturity
i.e. Equity, Debt, InvITs, and glide path for goal
ETCDs, Gold & Silver ETF. based investing
Detailed structure is placed at
Annexure 1B.
3.8.5. Other Schemes:
Sr. Category Scheme Characteristics Type of scheme (uniform
No of description of scheme)
Schemes
1 Index Minimum investment in An open ended scheme
Funds/ securities of a particular index replicating/ tracking _ index
ETFs (which is being
replicated/ tracked)- 95% of
total assets
2 FoFs Minimum investment in the An open ended fund of fund
(Overseas/ underlying fund - 95% of total scheme investing in fund
Domestic) assets (mention the underlying
funds)
3.8.6. For FoFs with multiple underlying, framework issued vide communication
dated June 30, 2025 (Annexure 1C) to AMFI shall be referred.
3.8.7. For easy identification by investors, in order to bring uniformity in names
of schemes for a particular category across Mutual Funds and to ensure
that schemes remain “true-to-label”, the scheme name shall be the same
as the scheme category. Words/ phrases that highlight/ emphasize only
the return aspect of the scheme shall not be used in the name of the
scheme.
3.8.8. Further, the ‘type of scheme’ (mentioned below the scheme name in the
offer documents/ advertisements/ marketing material/etc.) shall adhere to
the description given in the third column of the tables, as applicable.
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3.8.9. The nomenclature, investment objective, investment strategy, benchmark
and other parameters of the existing schemes shall be suitably modified
(wherever applicable) to bring it in line with the categories of schemes
listed above. Such changes shall not be considered as fundamental
attribute change. Existing schemes shall comply with the provisions of this
section latest by August 26, 2026.
3.8.10. Mutual Funds shall disclose category wise portfolio overlap levels i.e.
equity scheme vs other equity schemes, debt scheme vs other debt
schemes and hybrid vs other hybrid schemes. Such disclosure shall
be published on AMC website for investor communication on
a monthly basis. Detailed Methodology for computing portfolio overlap is
provided at Annexure 1A.
3.9. Definition of Large Cap, Mid Cap and Small Cap44:
3.9.1. In respect of the investment universe for equity schemes, the definition of
large cap, mid cap and small cap shall be as follows:
(a) Large Cap: 1st -100th entities in terms of full market capitalization
(b) Mid Cap: 101st -250th entities in terms of full market capitalization
(c) Small Cap: 251st entities onwards in terms of full market
capitalization
3.9.2. Mutual Funds would be required to adopt the list of stocks/REITs
prepared by AMFI in this regard and AMFI would adhere to the following
points while preparing the list:
(a) If a stock/REIT is listed on more than one recognized stock exchange,
an average of full market capitalization of the stock/REIT on all such
stock exchanges, will be computed;
(b) In case a stock/REIT is listed on only one of the recognized stock
exchanges, the full market capitalization of that stock/REIT on such
an exchange will be considered.
(c) This list would be uploaded on the AMFI website and the same would
be updated every six months based on the data as on the end of June
and December of each year. The data shall be available on the AMFI
website within 5 calendar days from the end of the 6 months’ period.
(d) While preparing the single consolidated list of stocks, average full
market capitalization of the previous six month of the stocks shall be
considered45.
44 Refer SEBI email dated January 28, 2022
45 SEBI Circular No. SEBI/HO/IMD/DF3/CIR/P/2017/126 dated December 04, 2017
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3.9.3. Subsequent to any updation in the list, Mutual Funds would have to
rebalance their portfolios (if required) in line with updated list, within a
period of one month.
3.9.4. In order to enable mutual funds to invest in newly listed stocks/REITs and
listing arising on account of Scheme of Arrangements such as demergers
between July – December & January – June of a calendar year, AMFI
shall prepare a list on a monthly basis.
3.10. Process to be followed for categorization and rationalization of
schemes:
3.10.1. Only one scheme per category would be permitted, except:
(a) Index Funds/ ETFs replicating/ tracking different indices;
(b) Fund of Funds having different underlying schemes; and
(c) Sectoral/ thematic funds investing in different sectors/ themes
3.10.2. 46Further, Mutual Funds can launch either of the following ELSS scheme
in open ended Scheme Category, subject to compliance with guidelines
on Equity Linked Saving Scheme, 2005 notified by Ministry of Finance:
(a) Active ELSS Scheme - In terms of Item No. 13 under Paragraph 3.8.1
above under “Equity Schemes” category or;
(b) Passive ELSS Scheme (through Index Fund) - In terms of Item No. 1
under Paragraph 3.8.5 under “Other Schemes” category. The
passive ELSS scheme shall be based on one of the indices
comprising of equity shares from top 250 companies in terms of
market capitalization
3.11. Timelines for Rebalancing of Portfolios of Mutual Fund Schemes47
3.11.1. In the event of deviation from mandated asset allocation mentioned in the
Scheme Information Document (SID) or various prudential limits
prescribed by the Board48, inter-alia, including issuer limits, group limits
and sector limits etc. due to passive breaches (occurrence of instances
not arising out of omission and commission of AMCs), rebalancing period
across schemes shall be as follows:
SI. Category of Scheme Mandated
No. Rebalancing
Period
46 SEBI Circular no. SEBI/HO/IMD/DOF2/P/CIR/2022/69 dated May 23, 2022
47 SEBI circular no SEBI/HO/IMD/IMD-II DF3/P/CIR/2022/39 dated March 30, 2022, Refer SEBI Letter No. – SEBI/HO/IMD-I
DOF-2/P/OW/2022/26571/1 dated June 29, 2022
48 SEBI Circular No. SEBI/HO/IMD/PoD2/P/CIR/2025/92 dated June 26, 2025
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(a) Overnight Fund Not Applicable
(b) All schemes other than Index Funds Thirty (30)
and Exchange Traded Funds business
days
3.11.2. In case the portfolio of schemes (all schemes other than Index Funds and
Exchange Traded Funds) mentioned at Paragraph 3.11.1 above are not
rebalanced within the above mandated timelines, justification in writing,
including details of efforts taken to rebalance the portfolio shall be placed
before Investment Committee. The Investment Committee, if so desires,
can extend the timelines up to 60 business days from the date of
completion of mandated rebalancing period.
3.11.3. In case the portfolio of schemes is not rebalanced within the
aforementioned mandated plus extended timelines, AMC shall:
(a) not be permitted to launch any new scheme till the time the portfolio
is rebalanced.
(b) not levy exit load, if any, on the investors exiting such scheme(s).
3.11.4. Reporting and Disclosure Requirements:
(a) AMCs to report the deviation to Trustees at each stage. The reporting
to Trustee shall be initiated immediately after the expiry of the
mandated rebalancing period (i.e. 30 business days).
(b) In case the AUM of deviated portfolio is more than 10% of the AUM
of main portfolio of scheme, AMCs shall immediately after the expiry
of the mandated rebalancing period (i.e. 30 business days):
(i) disclose the same to the investors through SMS and email /
letter including details of portfolio not rebalanced.
(ii) communicate to investors through SMS and email / letter when
the portfolio is rebalanced.
(iii) subject line of the aforementioned emails / letters should be
uniform across industry and clearly indicate “breach of” /
“deviation” from mandated asset allocation or prescribed
prudential limits.
(c) Scheme wise deviation of the portfolio, beyond the specified limits,
from the mandated asset allocation beyond 30 business days shall
also be disclosed on the website of the AMC.
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(d) AMCs shall disclose any deviation from the mandated asset
allocation or prescribed prudential limits to investors along with
periodic portfolio disclosures as specified by the Board from the date
of lapse of mandated plus extended rebalancing timelines.
3.11.5. The above-mentioned norms shall be applicable to main portfolio only and
not to segregated portfolio(s), if any.
3.12. Exclusion of investment in units of CDMDF from asset allocation limits49
3.12.1. For calculation of asset allocation limits of mutual fund schemes in terms
of Part IV of this Chapter, investment in units of CDMDF shall be excluded
from base of net assets.
49 Inserted by SEBI Circular No. SEBI/HO/IMD/PoD2/P/CIR/2023/152 dated September 06, 2023
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CHAPTER 4: NEW PRODUCTS
4.1. Fund of Fund Scheme50
4.1.1. The SID and the advertisements pertaining to Fund of Funds Scheme51
shall disclose that the investors are bearing the recurring expenses of the
scheme, in addition to the expenses of the underlying schemes in which
the Fund of Funds Scheme makes investments.
4.1.2. AMCs shall not enter into any revenue sharing arrangement with the
underlying funds in any manner and shall not receive any revenue by
whatever means/head from the underlying fund. Any commission or
brokerage received from the underlying fund shall be credited into
concerned scheme’s account52.
4.1.3. Fund of funds mutual fund schemes shall adopt the total expense
structures laid out in MF Regulations53, which shall be clearly disclosed in
the SIDs.
4.2. Gold Exchange Traded Fund Scheme (Gold ETF) and Silver Exchange
Traded Funds (Silver ETFs)
Particulars Gold ETF54 Silver ETFs55
4.2.1. In vestment To generate returns that are in line with the
Objective performance of physical gold/silver in domestic prices,
subject to tracking error.
4.2.2. A3sset A Gold Exchange A Silver ETF scheme shall
A.llocation Traded Fund (Gold ETF) invest at least 95% of the
2
Scheme56 shall invest at net assets of the scheme in:
.
least 95% of the net
1 a) Silver and
assets of the scheme in:
b) Silver related
a) Gold and
instruments.
b) Gold related
Explanation:
instruments57 as may
Exchange Traded
be specified by the
Commodity
50 SEBI Circular No. MFD/CIR. No.04/11488/2003 dated June 12, 2003.
51 Regulation 2(ma) of the Mutual Funds Regulations introduced vide Gazette Notification No. S.O 632(E) dated May 29, 2003.
52 SEBI Circular No. SEBI/IMD/CIR No 18/198647/2010 dated March 15, 2010
53 Regulation 66(7) and 66(8) of SEBI (Mutual Funds) Regulations, 2026
54 SEBI Circular No. SEBI/IMD/CIR. No.4/58422/06 dated January 24, 2006, SEBI Circular No. SEBI/IMD/CIR No.2/65348/06
dated April 21, 2006, SEBI Circular No. SEBI/IMD/CIR No.14/84243/07 dated January 15, 2007.
55 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/668 dated November 24, 2021.
56 Regulation 2(u) of the SEBI (Mutual Funds) Regulations, 2026
57 Regulation 2(v) of the SEBI (Mutual Funds) Regulations, 2026
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Board58 from time to Derivatives (ETCDs)
time. having silver as the
underlying shall be
Explanation- Gold
considered as ‘silver
Deposit Scheme (GDS),
related instrument’ for
199959 of banks, Gold
Silver ETFs.
Monetization Scheme,
2015 (GMS) and
Exchange Traded
The physical silver shall be
Commodity Derivatives
of standard 30 kg bars with
(ETCDs) having gold as
fineness of 999 parts per
the underlying shall be
thousand (or 99.9% purity)
designated as gold
confirming to London
related instruments60.
Bullion Market Association
(LBMA) Good Delivery
Standards.
Existing investments by
Gold ETFs of Mutual
Funds under the GDS
shall continue till
maturity unless
withdrawn prematurely.
The physical gold shall
be standard bars with
fineness of 995 parts per
thousand (or 99.5%
purity) confirming to
London Bullion Market
Association (LBMA)
Good Delivery
Standards.
4.2.3. V3aluatio n Gold shall be valued Silver shall be valued based
. based on the on the methodology
2
methodology specified specified in Chapter 10 of
.
in Chapter 10 of this this Master Circular.
2
Master Circular.
58 SEBI Circular No. SEBI/IMD/CIR No. 4/58422/06 dated January 24, 2006.
59 SEBI Circular No. CIR/IMD/DF/04/2013 dated February 15, 2013
60 SEBI Circular No. CIR/IMD/DF/11/2015 dated December 31, 2015
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4.2.4. D3eterminati The NAV of units shall be calculated up to four decimal
o.n of Net points as shown below:
2
Asset
.
Value61 Market or Fair Value of Scheme's investments
3
+ Current Assets - Current Liabilities and
Provision
NAV (in
INR) =
Number of Units outstanding under the
Scheme on the Valuation Date
4.2.5. R3ecurring The recurring expenses limits as per the MF
E.xpenses Regulations63 shall be applicable to Gold64/ Silver ETF
62
2
schemes.
.
4
4.2.6. B3enchmark65 Price of gold (based on
Price of silver (based on
. valuation norms as
valuation norms as
2
prescribed under
. prescribed under Chapter
Chapter 10 of this Master
5 10 of this Master Circular.)
Circular.)
4.2.7. H3alf yearly Physical verification of gold66/silver underlying the
r.eport by Gold/Silver ETF units shall be carried out by statutory
2
Trustees auditors of mutual fund schemes and reported to
.
trustees on half yearly basis.
6
The confirmation on physical verification of gold /silver
as stated above shall also form part of half-yearly
report by trustees to the Board.
4.2.8. D3isclosure The NAV shall be disclosed on every business day on
o.f NAV the website of the AMC. Further, the indicative NAVs
2
of Gold67/ Silver ETFs shall be disclosed on Stock
.
Exchange platforms, where the units of these ETFs
7
61 SEBI Circular No. SEBI/IMD/CIR No.2/65348/06 dated April 21, 2006.
62 SEBI Circular No. SEBI/IMD/CIR No.2/65348/06 dated April 21, 2006.
63 Regulation 66(b)(i) of SEBI (Mutual Funds) Regulations, 2026
64 SEBI Circular No. SEBI/IMD/CIR No.2/65348/06 dated April 21, 2006.
65 SEBI Circular No. SEBI/IMD/CIR No.2/65348/06 dated April 21, 2006.
66 SEBI Circular No. Cir/IMD/DF/20/2010 dated December 06, 2010
67 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/668 dated November 24, 2021
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are listed, on continuous basis during the trading
hours.
4.2.9. T3racking The provisions mentioned at Paragraph 4.5.4 below,
E.rror & shall be followed for tracking error & tracking
2
Tracking difference for Gold/ Silver Exchange Traded Funds.
.
Difference68
8
4.2.10. D3isclosures To enable the investors to take an informed decision,
. the SID of Gold69/ Silver ETFs shall, inter-alia, disclose
2
the following:
.
9 a) Tracking error and tracking difference,
b) Market risk due to volatility in gold/silver prices,
c) Liquidity risks in physical or derivative markets
impairing the ability of the fund to buy and sell
gold/silver,
d) Risks associated with handling, storing and
safekeeping of physical gold/silver;
e) Applicable tax provisions.
4.2.11. D3edicated For commodity-based funds such as Gold ETFs, Silver
F.und ETFs and other funds participating in commodities
2
Manager market, appointment of a dedicated fund manager
.
shall be optional. However, the person appointed as
1
fund manager of such funds should have adequate
0
expertise and experience to manage investments in
commodities market. The Board of the AMCs shall be
responsible for ensuring compliance and reporting
regarding the same to trustees, on a periodic basis70.
4.2.12. L3iquidity a) Units of Gold/ Silver ETFs shall be listed on the
. recognized Stock Exchange(s).
2
.
1
b) The AMC shall appoint Authorized Participants
1
(APs)/ Market Makers (MMs) to provide liquidity for
the units of Gold/ Silver ETFs in secondary market
on an ongoing basis.
68 SEBI Circular No. SEBI/HO/IMD/DOF2/P/CIR/2022/69 dated May 23, 2022
69 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/668 dated November 24, 2021.
70 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-2/P/CIR/2024/30 dated April 30, 2024 and SEBI Circular No.
SEBI/HO/IMD/DF2/CIR/P/2021/668 dated November 24, 2021
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c) APs/ MMs and large investors may directly buy/sell
units with the Mutual Fund in creation unit size. The
AMC shall disclose the details about the creation
unit size of Gold/ Silver ETF in Scheme Information
Document (SID).
4.2.13. Investment in GDS, GMS and ETCD having gold as the underlying by
Gold ETFs of mutual funds shall be subject to the following conditions:
(a) The cumulative exposure to aforementioned gold related instruments
shall not exceed 50% of net asset value of the scheme. However,
within the 50% limit, the investment limit for GDS of banks and GMS
as part of gold related instrument shall not exceed 20% of net asset
value of the scheme. The unutilized portion of the limit for GDS of
banks and GMS can be utilized for ETCD having gold as the
underlying.
(b) Before investing in aforementioned gold related instruments, mutual
funds shall put in place a written policy with regard to such
investments with due approval from the Board of the AMC and the
Trustees. The policy shall state that such investment in GDS of any
bank and GMS shall be subject to approval of Trustees. The policy
shall be reviewed by the Board of AMC and Trustees at least once a
year.
(c) Certificates issued in respect of investments made by Gold ETFs in
GDS of banks and GMS can be held by the mutual funds in
dematerialized or physical form71.
4.2.14. Investment in ETCDs having silver as the underlying by Silver ETFs shall
be subject to the following conditions:
(a) The exposure to ETCDs having silver as the underlying shall not
exceed 10% of net asset value of the scheme. However, the limit of
10% shall not be applicable to Silver ETFs where the intention is to
take delivery of physical silver and not to roll over its position to next
contract cycle.
(b) Before investing in ETCDs having silver as the underlying, mutual
funds shall put in place a written policy with regard to such investment
with due approval from the Board of the AMC and the Trustees. The
71 SEBI Circular No. CIR/IMD/DF/16/2013 dated October 18, 2013
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policy shall be reviewed by the Board of AMC and Trustees at least
once a year.
(c) The cumulative gross exposure of Silver ETFs shall not exceed 100%
of the net assets of the scheme.
4.3. Portfolio Concentration Norms for Equity Exchange Traded Funds
(ETFs) and Index Funds72
4.3.1. To address the risk related to portfolio concentration, any ETF/Index Fund
that seeks to replicate a particular Index shall ensure that such index
complies with the following norms:
(a) The index shall have a minimum of 10 stocks as its constituents
(b)
Sr. Particulars Description Maximum
No Weight in the
index
(i) Single Stock Weight Weight of single 25% of index
in Index stock in Index other
than sectoral and
thematic index
1.1.1.1 Weight of single 35% of index
stock in sectoral
and thematic index
(ii) Top three stocks in Weight of top three 65% of index
the index constituents of the
index
(c) The individual constituent of the index shall have a trading
frequency greater than or equal to 80% and an average impact cost
of 1% or less over previous six months.
4.3.2. Compliance Procedure:
(a) The aforesaid norms shall be applicable to all ETFs/ Index Funds
tracking equity indices.
(b) The ETF/ Index Fund issuer shall
(i) evaluate and ensure compliance with the aforesaid norms for
all its ETFs/ Index Funds at the end of every calendar quarter.
72 SEBI Circular No SEBI/HO/IMD/DF3/CIR/P/2019/011 dated January 10, 2019
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(ii) ensure that the updated constituents of the Indices (for all its
ETFs/ Index Funds) are available on the website of such
ETF/Index Fund issuer at all points of time.
4.4. Norms for Debt Exchange Traded Funds (ETFs)/Index Funds73
4.4.1. Types of Debt indices:
(a) Debt ETFs/ Index Funds can be based on any of the following indices:
Sr. Index Type Constituent securities
No.
(i) Corporate Debt Corporate Debt Securities
Indices
(ii) G-sec Indices Government Securities (G-sec), T-bills and/or
State Development Loans (SDLs)
(iii) Hybrid Debt Indices A combination of Corporate Debt Securities
and G-sec/T-bills/SDLs
(b) The detailed provisions in this regard are given below:
4.4.2. Debt ETFs/Index Funds: Index Constitution
AMC shall ensure the following:
Requirement Detail
(a) Issuer Constituents of the index shall be aggregated at
Aggregation issuer level for the purpose of determining
investment limits for single issuer, group, sector, etc.
(b) Defined Constituents shall have a defined credit rating and
rating & defined maturity which shall be specified in the
maturity index methodology.
(c) Rating quality Investment grade and above
of
constituents
73 SEBI Circular No. SEBI/HO/IMD/DOF2/P/CIR/2022/69 dated May 23, 2022 & SEBI Circular No
SEBI/HO/IMD/DF3/CIR/P/2019/147 dated November 29, 2019, Refer SEBI Letter No. – SEBI/HO/IMD-I DOF-
2/P/OW/2022/26571/1 dated June 29, 2022
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(d) Liquidity & Constituents (other than the portion comprising of
diversification G-secs and/or SDLs) shall have adequate liquidity
and diversification at issuer level.
(e) Review Periodically (at least on half-yearly basis).
frequency of
Constituents
(f) Replication Debt ETFs/ Index Funds shall replicate the
criterion underlying debt index. The portfolio of ETF/Index
Funds shall be considered to be replicating the index
subject to meeting the requirements specified at
Paragraph 4.4.5, 4.4.6, 4.4.7 below.
(g) Disclosure AMCs shall ensure that the updated constituents of
the indices and methodology for all their Debt ETFs/
Index Funds are available on their respective
websites at all points of time. Further, the historical
data with respect to constituents of the indices since
inception of schemes shall also be disclosed on their
website.
(h) List of AMFI has issued a list of debt indices based on
permitted which debt ETFs/ Index Funds shall be launched
indices by AMCs. The said list is available on AMFI’s
website.
4.4.3. Single Issuer limit for debt indices shall be as follows:
Sr. Type of Index Maximum Maximum Maximum
No. weight of weight of weight of
single issuer single single
with AAA issuer with issuer with
rated AA rated A and
securities in securities in below rated
the index the index securities
in the index
a) Indices having at least 15% 12.5% 10%
80% weight allocated
to corporate debt
securities
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b) Hybrid Debt Indices 10% 8% 6%
(comprising both
corporate debt The said limit
securities and G-sec shall be 15%
/SDL ) having upto for AAA rated
80% weight allocated securities of
to corporate debt Public Sector
securities Units (PSUs)
and AAA
rated
securities of
Public
Financial
Institutions
(PFIs)
issuers.
c) G-Sec Indices Single issuer limit shall not be applicable.
4.4.4. Sectoral and Group Exposure limits for debt indices:
Details Maximum weight
a) Total e xposure of index to a particular 25%
group (excluding securities issued by
PSUs, PFIs and Public Sector banks
(PSBs).
Explanation: For the purpose of this
provision, ‘group’ shall have the same
meaning as defined in Regulation 2(x)
b) Total e xposure of index to a particular 25%
sector (excluding G-sec, T-Bills, SDLs and
The above limit shall not
AAA rated securities issued by PSUs,
be applicable for sectoral
PFIs and PSBs).
or thematic debt indices.
4.4.5. Corporate Debt ETF/Index Funds: Debt ETFs/ Index Funds based on
Index of Corporate Debt Securities
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Debt ETFs/ Index Funds based on index comprising of only corporate debt
securities shall be considered to be replicating the underlying debt index
provided:
Norms Details
(a) Co ncentration Securities of issuers accounting for at least 60% of
of weight in the index shall represent at least 80% of
constituents NAV of the ETF/Index Fund
(b) Ca p on The securities of issuers not forming part of the
securities index shall not exceed 20% of NAV of the ETF/
outside the Index Fund
index
(c) Mi nimum At least 8 issuers from the underlying index shall
number of form part of the portfolio of ETF/ Index Fund
issuers in
scheme
portfolio
(d) Sin gle issuer Exposure of ETF/ Index Fund to single issuer:
limit
Rating of securities Maximum exposure
AAA rated 15% weight in the
portfolio
AA rated 12.5% weight in the
portfolio
A and below rated 10% weight in the
portfolio
(e) Se ctoral and
Norms Maximum exposure
Group
exposure Total exposure of the 25% of NAV of the
limits ETF/ Index Fund to a scheme
particular group
(excluding investments
in securities issued by
PSUs, PFIs and PSBs).
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Explanation: For the
purpose of this
provision, ‘group’ shall
have the same
meaning as defined in
Regulation 2(x).
Total exposure of the
ETF/ Index Fund to a
25% of the NAV of
particular sector
the scheme
(excluding G-sec, T-
Bills, SDLs and AAA
rated securities issued
The above limit shall
by PSUs, PFIs and
not be applicable for
PSBs).
schemes based on
sectoral or thematic
debt indices.
(f) Pe rmissible The Macaulay Duration (hereinafter referred as
deviation in “duration”) of the portfolio of the ETF/ Index Fund
duration replicates the duration of the underlying index within
a maximum permissible deviation of +/- 10%.
(g) Pe rmissible
deviation in
duration for Residual maturity of Permissible
Target portfolio deviation in duration
Maturity (or
Target Date) Greater than 5 years Either +/- 6 months or
ETFs/Index +/- 10% of duration,
Funds whichever is higher.
Up to 5 years Either +/- 3 months or
+/- 10% of duration,
whichever is higher.
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At no point of time, the residual maturity of any
security forming part of the portfolio shall be beyond
the target maturity date of the ETF/ Index Fund.
(h) Ra ting-wise The rating wise weightage of debt securities in the
weightage portfolio of ETF/ Index Fund replicates the
replication underlying index. However, greater allocation of up
to 10% of the portfolio may be made to higher rated
debt securities.
(i) Re balancing
period for
rebalancing Event Rebalancing
the portfolio Period/Norms
of the
ETF/Index a. Change in Rebalance within 7
Fund constituents of the calendar days.
index due to periodic
review
b. Rating downgrade of Rebalance within 30
any security below calendar days.
mandated rating in
index methodology
(including downgrade
to below investment
grade)
c. In case of rating Security may be
downgrade to below segregated in
investment grade accordance with
Paragraph 5.5.3 &
5.5.4 of this Master
Circular.
4.4.6. G-sec ETF/Index Fund: Debt ETFs/ Index Funds based on G-sec, T-bills
and SDLs
Norms Details
(a) P ermissible The duration of the portfolio of ETF/ Index
deviation in duration Fund replicates the duration of the
underlying index within a maximum
permissible deviation of +/- 10%.
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(b) P ermissible Same norms as applicable for corporate
deviation in duration debt indices at Paragraph 4.4.5.(g) above.
for Target Maturity
(or Target Date)
ETFs/Index Funds
(c) C onstant Maturity ETFs/Index Funds replicating a Constant
Indices Maturity index shall invest in securities with
residual maturity within +/- 10% of maturity
range of the index.
4.4.7. Hybrid Debt ETF/ Index Fund - Debt ETFs/ Index Funds based on a
Hybrid Index of Corporate Debt Securities and G-Sec/T-bills/SDLs
Hybrid Debt ETFs/ Index Funds shall be considered to be replicating the
underlying index, provided:
(a) Category 1: For ETF/ Index Fund based on an index comprising of
more than 80% weight in corporate debt securities, the provisions
mentioned at Paragraph 4.4.5 above shall be applicable.
(b) Category 2: For ETF/ Index Fund based on an index comprising of
up to 80% weight in corporate debt securities:
(c) Applicable Norms:
(i) The provisions mentioned at Paragraph 4.4.5 above, apart
from Paragraph 4.4.5.(c) & 4.4.5.(d), shall apply on the portion
of the portfolio comprising of corporate debt securities.
The exposure limit to a single issuer shall be as under:
Rating of securities Maximum exposure
AAA rated 10% weight in the portfolio
However, for AAA rated securities
of PSU & PFI issuers, the
aforesaid limit shall be 15%.
AA rated 8% weight in the portfolio
A and below rated 6% weight in the portfolio
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(ii) For the portion of the portfolio of the ETF/ Index Fund
comprising of G-sec/T-bills/SDLs, the provisions mentioned at
Paragraph 4.4.6 above shall apply.
4.4.8. At all points of time, positioning of the ETF/ Index Fund in the Potential
Risk Class (PRC) matrix shall be in the same cell as that of positioning of
the index in the PRC matrix.
4.4.9. Any transaction undertaken in the scheme portfolio of ETF/ Index Fund in
order to meet the redemption and subscription obligations shall be done
while ensuring that post such transaction, replication of the portfolio with
the index is maintained at all points of time.
4.5. Development of Passive Funds74
4.5.1. Norms for Market Making Framework for ETFs
(a) AMC shall appoint at least two Market Makers (MMs), who are
members of the Stock Exchanges, for ETFs to provide continuous
liquidity on the stock exchange platform. MM shall transact with AMC
only in multiples of creation unit size.
(b) The AMC shall have an approved policy regarding market making in
ETFs based on the framework for market making as provided at
Annexure 2.
(c) AMCs shall facilitate in-kind creation and redemption of units of ETFs
(including Debt ETFs) by MMs on a best effort basis.
(d) Incentive for MMs
(i) Incentives, if any, to MMs shall be charged to the scheme within
the maximum permissible limit of TER.
(ii) A transparent incentive structure for the MMs shall be put in
place, and the incentives shall, inter alia, be linked to
performance of the MMs in terms of generating liquidity in units
of ETFs. The relevant data regarding trading volume, bid-ask
spread in units of ETFs, and such other information as may be
required to formalize performance based incentive structure,
shall be obtained from the stock exchanges.
74 SEBI Circular No. SEBI/HO/IMD/DOF2/P/CIR/2022/69 dated May 23, 2022, Refer SEBI letter No. SEBI/HO/IMD-I
DOF2/P/OW/2022/26517/1 dated June 29, 2022. SEBI letter No. SEBI/HO/IMD/IMD-PoD-2/P/OW/2023/17644/1 dated April
28, 2023, SEBI letter No. SEBI/HO/IMD-POD-2/P/OW/2023/43653/1 dated October 26, 2023 & SEBI letter No.
SEBI/HO/IMD/POD-II/P/OW/2023/44633/1 dated November 06, 2023.
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(iii) Stock Exchanges may also incentivize the MMs through
Liquidity Enhancement Schemes (LES) as per the applicable
provisions.
(iv) There shall be necessary checks and balances and adequate
disclosure of the principles of incentive structure on the website
of the AMCs and also in the Scheme Information Documents
(SIDs) of ETFs. There shall also be proper audit trail for scheme
wise incentives.
(e) Market Making Settlement Process for domestic Equity ETFs
It has been decided to implement net settlement between cash leg of
transactions in units of ETF by the MM and consequent transaction
in underlying basket by the ETF. In this regard, the following has been
decided:
(i) MMs shall be permitted to transact in the basket of securities
underlying the ETF against equivalent transactions in units of
ETFs and transfer the net obligation of such transactions to the
ETF for unit creation or redemption. The AMCs shall be allowed
to create or redeem units of ETFs without upfront payment of
100% value of such units or upfront delivery of such units by the
MMs, respectively.
(ii) The above mechanism shall be permitted subject to equivalent
transactions in units and underlying basket for the same
settlement cycle and confirmation of both the legs by the
Custodian.
(iii) For the above mechanism,
(I) ETFs shall be allowed to buy or sell their own units, without
the same forming part of the asset allocation of the
scheme.
(II) Provisions mentioned at Paragraph 7.15.3(b)(iii) of this
Master Circular shall not be applicable.
(III) The transactions by the MM in the underlying basket shall
be excluded for the purpose of computation of aggregate
purchase or sale of securities through any broker as
required under the MF Regulations75.
(iv) Facilitation of the above mechanism for equity ETFs shall be at
the discretion of the AMC. However, AMC shall ensure that at
75 Regulation 22(5)(a)(i) and (ii) of SEBI (Mutual Funds) Regulations, 2026
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no point of time, the above mechanism shall increase the risk of
the ETF.
(v) The detailed operational guidelines in this regard, have been
issued by AMFI in consultation with Clearing Corporations. The
Clearing Corporations shall ensure that the necessary systems
are in place to enable the netting mechanism.
4.5.2. Direct transaction in ETFs through AMCs
(a) Direct transaction with AMCs shall be facilitated for investors only for
transactions (redemption or subscription) greater than INR 25 crore.
However, this threshold shall not be applicable for MMs and shall be
periodically reviewed76.
(b) Further, in terms of Paragraph 9.4.4 of this Master Circular relating to
usage of intra-day NAV for transacting in units of ETFs directly with
AMCs, the following has been decided:
(i) The provisions as mentioned at Paragraph 5.8 of this Master
Circular on "Swing pricing framework for mutual fund schemes”
shall not be applicable to Debt ETFs.
(ii) The requirement of “cut-off” timing for NAV applicability as
prescribed by the Board from time to time shall not be applicable
for direct transaction with AMCs in ETFs by MMs and other
eligible investors.
4.5.3. Liquidity window for Investors of ETFs with AMCs
(a) Investors can directly approach the AMC for redemption of units of
ETFs, for transactions upto INR 25 Cr. without any exit load, in the
following scenarios:
(i) Traded price (closing price) of the ETF units is at discount of
more than 1% to the day end NAV for 7 continuous trading days,
or
(ii) No quotes for such ETFs are available on stock exchange(s) for
3 consecutive trading days, or
(iii) Total bid size on the exchange is less than half of creation units
size daily, averaged over a period of 7 consecutive trading days.
(b) In the above scenarios, redemption applications received from
investors up to 3.00 p.m. on any trading day, shall be processed by
the AMC at the closing NAV of the day.
76 SEBI Circular No. SEBI/HO/IMD/DOF2/P/CIR/2022/145 dated October 28, 2022 & SEBI Circular No.
SEBI/HO/IMD/DF2/CIR/P/2022/102 July 28, 2022
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(c) The above instances shall be tracked by the AMC on a continuous
basis and if any of the above mentioned scenario arises, the same
shall be disclosed on the website of AMC.
4.5.4. Tracking Error and Tracking Difference
Feature Tracking error Tracking difference
(a) D efinition Annualized standard Annualized difference of
deviation of the difference daily returns between
in daily returns between the index or goods and
the underlying index or the NAV of the ETF/
goods and the NAV of the Index Fund.
ETF/ Index Fund based on
past one year rolling data.
For ETFs/ Index Funds in
existence for a period of
less than one year, the
annualized standard
deviation shall be
calculated based on
available data.
(b) Tracking Difference
Disclosure shall be disclosed by all
Tracking Error shall be
ETFs/ Index Funds on
disclosed by all
the website of the AMC
ETFs/Index Funds
and AMFI, on a monthly
(including Debt ETFs/
basis, for tenures 1 year,
Index Funds), on a daily
3 year, 5 year, 10 year
basis on the website of
and since the date of
respective AMCs and
allotment of units.
AMFI.
(c) L imit/ For ETFs/ Index Funds For Debt ETFs/ Index
Threshold (other than Debt ETFs/ Funds the annualized
Index Funds), Tracking tracking difference
Error shall not exceed 2%. averaged over one-year
period shall not exceed
1.25%.
In case of unavoidable
In case the average
circumstances in the
annualized tracking
nature of force majeure,
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which are beyond the difference over one
control of the AMCs, the year period for Debt
tracking error may exceed ETFs/ Index Funds is
2% and the same shall be higher than 1.25%, the
brought to the notice of same shall be brought to
Trustees with corrective the notice of trustees
actions taken by the AMC, with corrective actions
if any. taken by the AMC, if
any.
4.5.5. Rebalancing period for Equity ETFs/ Index Funds
(a) In case of change in constituents of the index due to periodic review,
the portfolio of equity ETF/ Index Funds shall be rebalanced within 7
calendar days.
(b) Any transaction undertaken in the scheme portfolio of ETF/ Index
Fund in order to meet the redemption and subscription obligations
shall be done while ensuring that post such transactions replication
of the portfolio with the index is maintained at all points of time.
4.5.6. Disclosure Norms for ETFs/ Index Funds
(a) The debt and equity ETFs/ Index Funds shall disclose the following
as a percentage of NAV of the scheme, on a monthly basis:
(i) Name and exposure to top 7 issuers and stocks respectively
(ii) Name and exposure to top 7 groups
(iii) Name and exposure to top 4 sectors
Change in constituents of the index, if any, shall be disclosed on the
AMC website on the day of change.
4.5.7. Nomenclature of ETFs/ Index Funds
(a) The nomenclature for ETFs/ Index Funds shall include the name of
the underlying index or goods.
(b) Further, for ETFs, after listing of the units, the scrip code of such ETFs
shall also be disclosed in the nomenclature at all places.
4.5.8. Hybrid ETFs/ Index Funds77
(a) AMCs may launch a new class of passive fund i.e., Hybrid passive
fund, which shall replicate a composite index comprising of equity and
77 SEBI Circular No. SEBI/HO/IMD/PoD2/P/CIR/2024/183 dated December 31, 2024
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debt and thus enable investors to invest in a single product having
exposure to equity and debt instruments.
(b) Hybrid ETF / Index Fund shall mean an ETF / Index Fund which
tracks an index/ indices containing a combination of equity and debt
constituents from the list of equity and debt indices as permitted
under Paragraph 20.2 of this Master circular.
(c) AMCs shall launch hybrid passive schemes only in the following 3
categories:
(i) Balanced (Equity 40%-60% and Debt 40%-60%)
(ii) Equity Oriented (Equity 65%-80% and Debt 20%-35%)
(iii) Debt oriented (Debt 65%-80% and Equity 20%-35%)
(d) The AMCs shall be allowed to launch one ETF and one Index Fund
for each category as mentioned at Paragraph 4.5.8(c) above.
(e) The minimum subscription amount at the time of New Fund Offer
(NFO) for Hybrid ETFs/ Index Funds shall be Rs. 10 Crore.
(f) The ETF/ Index Fund shall evaluate and ensure compliance with the
asset allocation of equity and debt for all its Hybrid ETFs/ Index
Funds, at the end of every calendar quarter.
(g) The provisions regarding composition of indices for debt ETFs / Index
Funds as specified in Paragraph 4.4 of this Master Circular, shall
apply to the debt component of Hybrid ETFs / Index Funds. Further,
debt indices for this purpose shall be only constant duration indices
as permitted under Paragraph 20.2 of this Master circular. Similarly,
the provisions regarding composition of indices for Equity ETFs /
Index Funds under Paragraph 4.3 of this Master Circular shall apply
to the Equity component of Hybrid ETFs / Index Funds.
(h) The provisions regarding replication and rebalancing norms as
specified in Paragraphs 4.4 and 4.5.5 of this Master Circular for ETF
/Index Funds shall apply as per the existing norms for debt and equity
components of Hybrid ETF /Index Funds, respectively.
(i) The limit for targeted TD for such funds has been specified by AMFI
in consultation with SEBI.
4.5.9. Disclosure of indicative Net Asset Value (iNAV)
(a) iNAV of an ETF i.e. the per unit NAV based on the current market
value of its portfolio during the trading hours of the ETF, shall be
disclosed on a continuous basis on the Stock Exchange(s), where the
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units of these ETFs are listed and traded and shall be updated in the
following manner:
Typ e of ETF Frequency of disclosure
(i) E quity ETFs Within a maximum time lag of 15 seconds from
underlying market.
(ii) D ebt ETFs and At least four times a day i.e. opening and closing iNAV
Hybrid ETFs78 and at least two times during the intervening period with
minimum time lag of 90 minutes between the two
disclosures
(iii) G old/ Silver Based on the latest available data for Gold/Silver and
ETFs accordingly may either be static or dynamic depending
upon the availability of the underlying price.
(iv) E TFs on Based on the latest available data regarding the
international portfolio of the ETF and accordingly may either be
indices static or dynamic depending on the intersection in
trading hours of domestic and overseas markets.
(b) For disclosure of iNAV, AMCs and Stock Exchanges shall develop
suitable mechanism for data sharing.
4.5.10. Disclosure of “Debt Index Replication Factor (DIRF)” in debt
oriented passive schemes79
(a) Debt oriented passive schemes shall disclose the “Debt Index
Replication Factor (DIRF)” of the portfolio along with the Tracking
Error and Tracking Difference on the website of the AMC.
(b) For this purpose, 100% replication at individual issuer level shall be
achieved if the portfolio has same issuer in the exact same
percentage as is the case for the Index.
(c) In case the weightage of a particular issuer is different in the Index
and the portfolio, then lesser of the weightage (subject to assigning 0
replication percentage where the instrument is absent in either index
or portfolio) would be considered as replicated (“Individual issuer
Replication Factor”) and the aggregate of all such replication factors
in the portfolio shall give portfolio level replication or DIRF. An
illustration is provided below:
78 SEBI Circular No. SEBI/HO/IMD/PoD2/P/CIR/2024/183 dated December 31, 2024
79 SEBI Circular No. SEBI/HO/IMD/PoD2/P/CIR/2024/183 dated December 31, 2024
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Issuer Index Weight Portfolio Replication
Weight factor
A 15% 13% 13%
B 13% 15% 13%
C 8% 8% 8%
D 12% 0% 0%
E 0% 12% 0%
F 0% 8% 0%
G- AAA 8% 0% 0%
G-Sec/ T-bills 22% 20% 20%
SDLs 13% 16% 13%
Cash and 9% 8% 8%
Cash
Equivalents
Total 100% 100% 75%
(d) DIRF shall also be disclosed along with the portfolio disclosure of the
debt passive schemes.
4.5.11. Close ended debt passive schemes80
(a) AMCs shall launch close ended debt passive schemes irrespective of
the MF being registered under the extant MF Regulations or the MF
Lite framework. Such close ended debt passive funds shall be based
only on target maturity indices.
(b) The existing standard framework for construction of index for target
maturity indices shall also be applicable for close ended passive
schemes subject to compliance with Paragraph 4.4 of this Master
Circular. However, the rating of the underlying instruments may go
below AAA up to investment grade in case of such funds.
80 SEBI Circular No. SEBI/HO/IMD/PoD2/P/CIR/2024/183 dated December 31, 2024
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4.6. Mutual Fund schemes for Environmental, Social and Governance
(“ESG”) Investing81
4.6.1. Thematic schemes on ESG Strategies
(a) It has been decided to introduce a separate sub-category for ESG
investments under the thematic category of Equity schemes. Any
scheme under the ESG category shall be launched with one of the
following strategies (details of strategies are at Annexure 3) –
(i) Exclusion
(ii) Integration
(iii) Best-in-class & Positive Screening
(iv) Impact investing
(v) Sustainable objectives
(vi) Transition or transition related investments
(b) Asset Allocation:
(i) Minimum allocation 80% of the total assets
under management
(AUM) shall be invested
in equity & equity related
instruments aligned with
the scheme’s selected
ESG strategy
(ii) Remaining Allocation The remaining portion (up
to 20%) of the investment
shall not be in contrast to
the ESG strategy of the
scheme
Mutual Funds shall endeavour to deploy a higher proportion of the
assets towards the selected ESG strategy and make suitable
disclosures.
(c) AMCs shall ensure that the ESG schemes launched by Mutual Funds
are clearly distinct in terms of asset allocation, investment strategy
etc.
81 SEBI Circular No. CIR/IMD/DF/20/2013 dated November 29, 2013
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4.6.2. Investment criteria for ESG Schemes
(a) ESG scheme shall invest at least 65% of its AUM in companies which
are reporting on comprehensive BRSR and are also providing
assurance on BRSR Core disclosures (details on BRSR Core
disclosures are as specified vide SEBI Circular No.
SEBI/HO/CFD/CFD-SEC-2/P/CIR/2023/122 dated July 12, 2023 and
SEBI Circular No. SEBI/HO/CFD/CFD-PoD-1/P/CIR/2024/177 dated
December 20, 2024). The balance AUM of the scheme may be
invested in companies having BRSR disclosures.
4.6.3. Disclosure requirements for ESG Schemes
(a) Scheme strategy to be reflected in scheme name: Mutual Funds shall
clearly disclose the name of ESG strategy in the name of the
concerned ESG fund/scheme. For eg., XYZ ESG Exclusionary
Strategy Fund, ABC ESG Best-in-class Strategy Fund etc.
(b) ESG scores of securities: Mutual Funds shall disclose the following
in their monthly portfolio statements of ESG schemes:
(i) Security wise BRSR Core scores {as and when the same is
made available by SEBI registered ESG Rating Provider
(ERPs)}, along with the BRSR scores.
(ii) Name of the ERPs providing ESG scores for the ESG schemes,
along with the ESG scores. In case there is a change in ERP,
the reason for such change shall also be disclosed in the next
monthly portfolio statements of ESG schemes.
(c) Voting disclosures by ESG schemes:
(i) In addition to the requirements under Paragraphs 7.26.3 and
7.26.4 of this Master Circular and in order to enhance
transparency on votes cast by ESG schemes, it has been
decided that under the rationale for voting decisions (whether”
in favour” or “against”), the AMCs shall categorically disclose
whether the resolution has or has not been supported due to
any environmental, social or governance reasons.
(ii) The disclosure of voting rationale may be made at the Mutual
Fund level. However, in instances where the voting approach
for ESG and non-ESG schemes of any Mutual Fund is not
same, the details and rationale for votes cast on behalf of ESG
schemes and non-ESG schemes shall be disclosed separately.
(d) Annual Fund Manager commentary and disclosure of case studies: A
‘Fund Manager Commentary’ along with the additional disclosures
with respect to engagements undertaken by Mutual Funds for ESG
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schemes, as required to be disclosed in terms of SEBI letter dated
February 08, 2022, shall be provided in the Annual Report of the ESG
schemes. The Fund Managers Commentary shall include the
following:
(i) Examples on how ESG strategy was applied on the fund, how
engagements were carried out, any escalation strategy that the
Fund Manager may have applied on the portfolio companies,
annual tracking of ESG rating movements in the investee
companies etc.
(ii) Case studies where Fund Managers have engaged with
investee companies with the clear objective of engagement
including those carried out for exercise of voting rights.
(iii) The details on number of engagements carried out in a year, the
modes of communication employed, and outcomes, if any
achieved in the reporting year. If ESG schemes have a specific
objective, then reporting shall be done on engagements and
outcomes achieved (if any) in the reporting year based on that
objective. Additional areas to be covered in case studies and
minimum disclosures has been specified by AMFI in
consultation with SEBI.
(iv) Annual tracking of ESG rating / score movements in the
investee companies.
(v) Percentage of AUM invested in such companies where there
are no BRSR disclosures (investments prior to October 01,
2022) and its impact, if any, on the Fund score.
(vi) In case of change in ERP, reason(s) for such change recorded
by AMCs.
(e) Assurance on ESG Schemes
(i) Independent assurance
(I) The AMCs shall obtain an independent reasonable
assurance on an annual basis regarding their ESG
scheme’s portfolio being in compliance with the strategy
and objective of the scheme, as stated in respective SIDs.
Such an assurance shall mandatorily be disclosed in the
scheme’s annual report.
(II) The Board of AMCs shall ensure that the assurance
provider for an ESG scheme has the necessary expertise,
for undertaking reasonable assurance.
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(III) The AMCs shall also ensure that there is no conflict of
interest with the assurance provider appointed for
providing assurance on their ESG schemes. For instance,
it shall be ensured that the assurance provider or any of its
associates do not sell its products or provide any non-audit
/ non-assurance related service including consulting
services, to the AMC or its group entities.
(ii) Certification by the Board of AMCs
(I) The board of directors of AMCs, based on comprehensive
internal ESG audit, shall certify compliance of ESG
schemes with the regulatory requirements including
disclosures and disclose the same in the annual reports of
the schemes.
(II) The aforementioned internal ESG audit shall, inter-alia,
include verification of the SIDs, Stewardship Reporting
and Responsible Investment Policy of the ESG Funds and
any other relevant document, to ensure that the
statements made in these documents are factual.
4.7. Infrastructure Debt Schemes82
4.7.1. As per Regulation 85(2)(d) any infrastructure debt fund scheme launched
by a mutual fund prior to date of notification of these Regulations shall
continue to be governed by provisions of Securities and Exchange Board
of India (Mutual Funds) Regulations, 1996 till such scheme is wound up.
4.7.2. Placement Memorandum:
(a) Private Placement to less than 50 investors has been permitted as
an alternative to New Fund Offer to the public, in case of
Infrastructure Debt Funds (IDF). In case of private placement, the
mutual funds would have to file a Placement Memorandum with SEBI
instead of a Scheme Information Document and a Key Information
Memorandum. However, all the other conditions applicable to IDFs
offered through the NFO route like kind of investments, investment
restrictions, etc. would be applicable to IDFs offered through private
placement.
(b) In terms of Regulation 49-OA of the SEBI (Mutual Funds)
Regulations, 1996, the Placement Memorandum shall be filed with
the Board as per the prescribed format.
(c) The Asset Management Companies shall ensure that the Placement
Memorandum is uploaded on their respective websites after
82 SEBI Circular No. CIR/IMD/DF/7/2013 dated April 23, 2013
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allotment of units, and on the website of such recognized Stock
Exchange, where it is proposed to be listed, at the time of listing of
the scheme.
4.7.3. Investments in IDF by FPIs
(a) The universe of strategic investors in the IDF has been expanded to
include, inter alia, FPIs registered with SEBI which are long term
investors subject to their existing investment limits.
(b) With reference to Regulation 49L of the SEBI (Mutual Funds)
Regulations, 1996 the following categories of FPIs are designated as
long term investors only for the purpose of IDF:
(i) Foreign Central Banks
(ii) Governmental Agencies
(iii) Sovereign Wealth Funds
(iv) International/Multilateral Organizations/ Agencies
(v) Insurance Funds
(vi) Pension Funds
(vii) Foreign feeder funds, having at all times, at least 20% of their
assets under management held by investors belonging to one
of more of the above categories of FPIs83
4.7.4. Investments by the IDF scheme
(a) With reference to Regulation 49P (1) of the SEBI (Mutual Funds)
Regulations, 1996, the investments in bank loans shall be made only
through the securitization mode.
83 SEBI Circular No. CIR/IMD/DF/20/2013 dated November 29, 2013
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CHAPTER 5: RISK MANAGEMENT FRAMEWORK84
5.1. Risk Management Framework for Mutual Funds
5.1.1. The Risk Management Framework (RMF) provides a set of principles or
standards, which inter alia comprise the policies, procedures, risk
management functions, roles & responsibilities of the management, the
Board of AMC and the Board of Trustees. The detailed RMF for mutual
funds is placed at Annexure 4.
5.1.2. The elements of RMF, wherever applicable, have been segregated into
‘mandatory elements' which should be implemented by the AMCs and
‘recommendatory elements' which are in line with other leading industry
practices that can be considered for implementation by the AMCs, to the
extent relevant to them.
5.1.3. AMCs shall perform a self-assessment of their RMF and practices and
submit a report, thereon, to their Board along with the roadmap for
implementation of the framework.
5.1.4. Compliance with the RMF should be reviewed annually by the AMC.
Reports of such reviews shall be placed before the Board of AMC and
Trustees for their consideration and appropriate directions, if any.
Trustees shall submit the findings and steps taken to mitigate the risk
along with their comments to SEBI in the half-yearly trustee reports.
5.2. Stress Testing of open ended Debt Schemes8586
5.2.1. As a part of risk management framework, Mutual Funds (MFs) shall carry
out stress testing of their portfolio, particularly for debt schemes in line
with AMFI Best Practice Guidelines on stress testing of Liquid Funds and
Money Market Mutual Fund Schemes (MMMFs).
5.2.2. In order to further strengthen the risk management practices, AMCs shall
adhere to the following guidelines for conducting stress testing on all open
ended Debt Schemes (except Overnight scheme):
(a) AMCs shall have stress-testing policy in place, duly approved by the
Board of AMC, which mandates stress testing on all open ended Debt
Schemes (except Overnight scheme).
(b) Stress test shall be carried out internally by the AMC at least on a
monthly basis, and more frequently, if the market conditions so
require.
84 SEBI Circular No. MFD/CIR/15/19133/2002 dated September 30, 2002 replaced by SEBI Circular No SEBI/HO/IMD/IMD-1
DOF2/P/CIR/2021/630 dated September 27, 2021 with effect from April 1, 2022, Refer SEBI email dated September 13, 2022.
85 SEBI Circular No. CIR/IMD/DF/03/2015 dated April 30, 2015. Refer SEBI email dated February 27, 2024.
86 SEBI Circular No.SEBI/HO/IMD/DF3/CIR/P/2020/229 dated November 06, 2020.
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(c) The concerned schemes shall be tested on the following risk
parameters, in addition to others as deemed necessary by the AMC:
(i) Interest rate risk;
(ii) Credit risk;
(iii) Liquidity & Redemption risk.
5.2.3. While conducting stress test, the impact of various risk parameters on the
scheme and its Net Asset Value (NAV) shall be evaluated. The
parameters used and the methodology adopted for conducting stress test
on such type of scheme, shall be detailed in the stress-testing policy.
5.2.4. Further, in the event the stress test reveals any vulnerability or early
warning signal, the same shall be brought to the notice of the Trustees
and corrective action as deemed necessary shall be taken to reinforce
their robustness. AMC shall also be required to have documented
guidelines to deal with the adverse situation effectively.
5.2.5. The stress-testing policy shall be reviewed by the Board of AMC and
Trustees, at least on an annual basis and shall cover the following
aspects:
(i) Adequacy of the documentation for various elements of the
stress testing framework
(ii) Scope of coverage of the stress testing policy and the levels of
stress applied
(iii) Integration of the stress testing framework in the day-to-day risk
management processes
(iv) Adequacy of the corrective actions and the efficacy of the
systems for their activation.
5.2.6. Further, Trustees shall be required to report compliance with provisions
of Paragraph 5.2 above and steps taken to deal with adverse situations
faced, if any, in the Half Yearly Trustee Report submitted to the Board.
5.3. Restriction on Redemption in Mutual Funds87
5.3.1. The AMC shall comply with the following requirements before imposing
restriction on redemption of mutual fund units:
(a) Restriction may be imposed when there are circumstances leading to
a systemic crisis or event that severely constricts market liquidity or
the efficient functioning of markets such as:
87 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2016/57 dated May 31, 2016
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(i) Liquidity issues - when market at large becomes illiquid affecting
almost all securities rather than any issuer specific security.
AMCs should have in place sound internal liquidity management
tools for schemes. Restriction on redemption cannot be used as
an ordinary tool in order to manage the liquidity of a scheme.
Further, restriction on redemption due to illiquidity of a specific
security in the portfolio of a scheme due to a poor investment
decision, shall not be allowed.
(ii) Market Failures, exchange closures - when markets are
affected by unexpected events which impact the functioning of
exchanges or the regular course of transactions. Such
unexpected events could also be related to political, economic,
military, monetary or other emergencies.
(iii) Operational Issues - when exceptional circumstances are
caused by force majeure, unpredictable operational problems
and technical failures (e.g. a black out). Such cases can only be
considered if they are reasonably unpredictable and occur in
spite of appropriate diligence of third parties, adequate and
effective disaster recovery procedures and systems.
(b) Restrictions on redemption may be imposed for a specified period of
time not exceeding 10 working days in any 90 calendar days period.
(c) Any imposition of restriction would require specific approval of Board
of AMCs and Trustees and the same shall be informed to SEBI
immediately.
(d) When restriction on redemption is imposed:
(i) No redemption requests up to INR 2 lakh shall be subject to
such restriction.
(ii) When redemption requests are above INR 2 lakh, AMCs shall
redeem the first INR 2 lakh without such restriction and
remaining part over and above INR 2 lakh shall be subject to
such restriction.
5.3.2. Disclosure: The above information regarding the possibility that the right
of the investor to redeem may be restricted in such exceptional
circumstances and the time limit for which it can be restricted shall be
disclosed to the investors prominently and extensively in the scheme
related documents.
5.4. Internal Credit Risk Assessment88:
88 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/2016/42 dated March 18, 2016 and SEBI Circular No.
SEBI/HO/IMD/DF2/CIR/2019/104 dated October 01, 2019.
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5.4.1. All AMCs shall have an appropriate policy and system in place to conduct
in-house credit risk assessment/ due diligence of debt and money market
instruments/ products at all points of time i.e. before investing in such
instruments/ products and also on continuous basis in order to have
proper assessment of the credit risk of the portfolio.
5.4.2. The internal policy shall have adequate provisions to generate early
warning signals (including yield based alerts) on deterioration of credit
profile of the issuer. Based on the alerts generated, the AMCs shall take
appropriate measures and report the same to trustees.
5.5. Creation of segregated portfolio in mutual fund schemes8990
5.5.1. For the purpose of Paragraph 5.5:
(a) The term ‘segregated portfolio’ shall mean a portfolio, comprising of
debt or money market instrument affected by a credit event, that has
been segregated in a mutual fund scheme.
(b) The term ‘main portfolio’ shall mean the scheme portfolio excluding
the segregated portfolio.
(c) The term ‘total portfolio’ shall mean the scheme portfolio including the
securities affected by the credit event.
5.5.2. AMC may create segregated portfolio of debt and money market
instruments in a mutual fund scheme, subject to the following:
(a) In case of a credit event at issuer level i.e. downgrade in credit rating
by a SEBI registered Credit Rating Agency (CRA), as under:
(i) Downgrade of a debt or money market instrument to ‘below
investment grade’, or
(ii) Subsequent downgrades of the said instruments from ‘below
investment grade’, or
(iii) Similar such downgrades of a loan rating.
(b) In case of difference in rating by multiple CRAs, the most
conservative rating shall be considered. Creation of segregated
portfolio shall be based on issuer level credit events as detailed at
Paragraph 5.5.2.(a) and implemented at the ISIN level.
(c) In case of unrated debt or money market instruments, actual default
of either the interest or principal amount by the issuer of such
89 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2018/160 dated December 28, 2018, Refer SEBI letter No.
SEBI/HO/IMD/DF2/OW/P/2019/22447/1 dated August 29, 2019, Refer SEBI letter No. SEBI/HO/IMD/DF2/OW/P/2019/28242/1
dated October 24, 2019
90 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2019/127 dated November 07, 2019.
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instrument shall be considered as credit event for creation of
segregated portfolio of such instruments.
(d) AMCs shall immediately inform AMFI about the actual default by the
issuer and subsequently AMFI shall immediately inform the same to
all AMCs. Pursuant to such dissemination of information, AMCs may
segregate the portfolio of debt or money market instruments of the
said issuer.
(e) Creation of segregated portfolio shall be optional and at the discretion
of the AMC. It can be created only if the SID of the scheme has
enabling provision for segregated portfolio with detailed disclosures
made in SAI.91
(f) All new schemes shall have the enabling provision included in the
SID for creation of segregated portfolio.
(g) AMCs shall have a detailed policy on creation of segregated portfolio
and the same shall be approved by the trustees.
5.5.3. 92Segregation of Portfolio in schemes having investment in instrument
with special features:
(a) Debt schemes with investments in instruments with special features
viz. subordination to equity (absorbs losses before equity capital) and
/or convertible to equity upon trigger of a pre-specified event for loss
absorption (Additional Tier I bonds and Tier 2 bonds issued under
Basel III) or debt schemes that have provision to invest in such
instruments shall ensure that the SID of the scheme has provisions
for segregated portfolio. The provision to enable creation of
segregated portfolio in the existing schemes shall be subject to
compliance with Regulation 22(9)(c).
(b) In case the said instrument is to be written off or converted to equity
pursuant to any proposal, the date of said proposal may be treated
as the trigger date. However, if the said instruments are written off or
converted to equity without proposal, the date of write off or
conversion of debt instrument to equity may be treated as the trigger
date.
(c) On the said trigger date, AMCs may, at their option, create
segregated portfolio in a mutual fund scheme subject to compliance
with relevant provisions of Paragraph 5.5 of this Master Circular and
any other relevant Regulations/Circulars/Guidelines issued from time
to time.
91 SEBI Circular No. SEBI/HO/IMD/IMD-RAC-2/P/CIR/2023/000175 dated November 01, 2023.
92 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2021/032 dated March 10, 2021.
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(d) Further, AMCs/Valuation Agencies shall ensure that the financial
stress of the issuer and the capabilities of issuer to repay the
dues/borrowings are reflected in the valuation of the securities from
the trigger date onwards.
5.5.4. The following process shall be followed for creation of segregated
portfolio:
(a) AMC shall decide on creation of segregated portfolio on the day of
credit event. Once an AMC decides to segregate portfolio, it shall
(i) seek approval of trustees prior to creation of the segregated
portfolio.
(ii) immediately issue a press release disclosing its intention to
segregate such debt and money market instrument and its
impact on the investors. The AMC should also disclose that the
segregation shall be subject to trustee approval. Additionally,
the said press release shall be prominently disclosed on the
website of the AMC.
(iii) ensure that till the time the trustee approval is received, which
in no case shall exceed 1 business day from the day of credit
event, the subscription and redemption in the scheme shall be
suspended.
(b) Once trustee approval is received by the AMC:
(i) Segregated portfolio shall be effective from the day of credit
event
(ii) AMC shall issue a press release immediately with all relevant
information pertaining to the segregated portfolio. The said
information shall also be submitted to the Board.
(iii) An e-mail or SMS should be sent to all unit holders of the
concerned scheme.
(iv) The NAV of both segregated and main portfolio shall be
disclosed from the day of the credit event.
(v) All existing investors in the scheme as on the day of the credit
event shall be allotted equal number of units in the segregated
portfolio as held in the main portfolio.
(vi) No redemption/ subscription shall be allowed in the segregated
portfolio. However, in order to facilitate exit to unit holders in
segregated portfolio, AMC shall enable listing of units of
segregated portfolio on the recognized stock exchange within
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10 business days of creation of segregated portfolio and also
enable transfer of such units on receipt of transfer requests.
(c) If the trustees do not approve the proposal to segregate portfolio,
AMC shall issue a press release immediately informing investors of
the same.
5.5.5. Valuation and processing of subscriptions and redemptions:
(a) Notwithstanding the decision to segregate the debt and money
market instrument, the valuation shall take into account the credit
event and the portfolio shall be valued based on the principles of fair
valuation (i.e. realizable value of the assets) in terms of the relevant
provisions of MF Regulations and Circular(s) issued thereunder.
(b) All subscription and redemption requests for which NAV of the day of
credit event or subsequent day is applicable will be processed as per
the provisions on applicability of NAV as under:
(i) Upon trustees’ approval to create a segregated portfolio -
(I) Investors redeeming their units shall get redemption
proceeds based on the NAV of main portfolio and shall
continue to hold the units of segregated portfolio.
(II) Investors subscribing to the scheme shall be allotted units
only in the main portfolio based on its NAV.
(ii) In case trustees do not approve the proposal to segregate the
portfolio, subscription and redemption applications shall be
processed based on the NAV of total portfolio.
5.5.6. Disclosure Requirements:
(a) A statement of holding indicating the units held by the investors in the
segregated portfolio along with the NAV of both segregated portfolio
and main portfolio as on the day of the credit event shall be
communicated to the investors within 5 business days of creation of
the segregated portfolio.
(b) Adequate disclosure of the segregated portfolio shall appear in all
scheme related documents, in monthly portfolio disclosures and in
the annual report of the mutual fund and the scheme.
(c) The Net Asset Value (NAV) of the segregated portfolio shall be
declared on every business day.
(d) The information regarding number of segregated portfolios created in
a scheme shall appear prominently under the name of the scheme at
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all relevant places such as SID, KIM-cum-Application Form,
advertisement, AMC and AMFI websites, etc.
(e) The scheme performance required to be disclosed at various places
shall include the impact of creation of segregated portfolio. The
scheme performance should clearly reflect the fall in NAV to the
extent of the portfolio segregated due to the credit event and the said
fall in NAV along with recovery(ies), if any, shall be disclosed as a
footnote to the scheme performance.
(f) The disclosures at Paragraphs 5.5.6.(d) and 5.5.6.(e) above
regarding the segregated portfolio shall be carried out for a period of
at least 3 years after the investments in segregated portfolio are fully
recovered/ written-off.
(g) The investors of the segregated portfolio shall be duly informed of the
recovery proceedings of the investments of the segregated portfolio.
Status update may be provided to the investors at the time of
recovery and also at the time of writing-off of the segregated
securities.
5.5.7. BER for the Segregated Portfolio:
(a) AMC shall not charge investment and advisory fees on the
segregated portfolio. However, BER (excluding the investment and
advisory fees) can be charged, on a pro-rata basis only upon
recovery of the investments in segregated portfolio.
(b) The BER so levied shall not exceed the simple average of such
expenses (excluding the investment and advisory fees) charged on
daily basis on the main portfolio (in percentage terms) during the
period for which the segregated portfolio was in existence.
(c) The legal charges related to recovery of the investments of the
segregated portfolio may be charged to the segregated portfolio in
proportion to the amount of recovery. However, the same shall be
within the maximum BER limit as applicable to the main portfolio. The
legal charges in excess of the BER limits, if any, shall be borne by
the AMC.
(d) The costs related to segregated portfolio shall in no case be charged
to the main portfolio.
5.5.8. Monitoring by Trustees:
(a) Trustees shall ensure that:
(i) The AMC puts in sincere efforts to recover the investments of
the segregated portfolio.
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(ii) Upon recovery of money, whether partial or full, it shall be
immediately distributed to the investors in proportion to their
holding in the segregated portfolio. Any recovery of amount of
the security in the segregated portfolio even after the write off
shall be distributed to the investors of the segregated portfolio.
(iii) An Action Taken Report (ATR) on the efforts made by the AMC
to recover the investments of the segregated portfolio shall be
placed in every trustee meeting till the investments are fully
recovered/ written-off.
(iv) The trustees shall monitor compliance with the guidelines
issued by the Board regarding segregation of portfolio in mutual
fund schemes, in respect of every segregated portfolio created
and report the same in the half-yearly trustee reports filed with
the Board.
(b) To avoid misuse of segregated portfolio, trustees shall ensure to have
a mechanism in place to negatively impact the performance
incentives of Fund Managers, Chief Investment Officers (CIOs), etc.
involved in the investment process of securities under the segregated
portfolio, mirroring the existing mechanism for performance
incentives of the AMC, including claw back of such amount to the
segregated portfolio of the scheme.
(c) The existence of the provisions for segregated portfolio shall not
encourage the AMCs to take undue credit risk in the scheme portfolio.
Any misuse of the provisions of segregated portfolio, shall be
considered serious and stringent action shall be taken.
5.6. Risk management framework for liquid and overnight funds93
5.6.1. Liquid funds shall hold at least 20% of its net assets in liquid assets. For
this purpose, ‘liquid assets’ shall include Cash, Government Securities,
T-bills and Repo on Government Securities.
5.6.2. In case, the exposure in such liquid assets falls below 20% of net assets
of the scheme, the AMC shall ensure compliance with the above
requirement before making any further investments.
5.6.3. Liquid Funds and Overnight Funds shall not park funds pending
deployment in short term deposits of scheduled commercial banks.
5.6.4. Liquid Funds and Overnight Funds shall not invest in debt securities
having structured obligations (SO rating) and/ or credit enhancements
93 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2019/101 dated September 20, 2019.
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(CE rating). However, debt securities with government guarantee shall be
excluded from such restriction.
5.6.5. Mutual Fund shall levy exit load on investors who exit the Liquid Fund
within 7 calendar days of their investment. To ensure uniformity across
the industry, the AMCs shall follow the minimum exit load in a liquid and
overnight fund on a graded basis as prescribed by AMFI in consultation
with the Board.
5.7. Prudential Norms regarding holding of liquid assets in Open ended Debt
Schemes94 :
5.7.1. All open ended debt schemes (except Overnight Fund, Liquid Fund, Gilt
Fund and 10-year constant maturity gilt fund) shall hold at least 10% of
their net assets in liquid assets. For this purpose, ‘liquid assets’ shall have
same meaning as defined in Paragraph 5.6.1.
5.7.2. The liquid assets specified above shall not be included for determining
the scheme characteristics of the open ended debt schemes as specified
under Part IV of Chapter 3 of this Master Circular95. In this regards it is
clarified that–
(a) For all regulatory limit calculations other than Asset Allocation Limits
(e.g. for Macaulay Duration, Risk-o-meter, investment restrictions
pertaining to issuer, sector and group), the base to be considered is
100% of Net Assets.
(b) For asset allocation limits (applicable for Banking and PSU Debt
Fund, Floating Interest Rates Fund, Credit Risk Fund and Corporate
Bond Funds scheme categories in terms of Part IV of Chapter 3 of
this Master Circular, the base shall be considered as Net assets
excluding the extent of minimum stipulated liquid assets i.e. 10%.
Illustration is given below –
Category Scheme characteristics Asset allocation
of scheme limit
Banking and Minimum investment in debt Minimum 72%**
PSU Debt instruments of banks, Public allocation to Banking
Fund Sector Undertakings, Public & PSU Assets
Financial Institutions and
Municipal Bonds – 80% of
total assets
94 SEBI Circular No.SEBI/HO/IMD/DF3/CIR/P/2020/229 dated November 06, 2020. Refer SEBI letter No. SEBI/HO/IMD/IMD-
POD-2/P/OW/2023/23603/1 dated June 08, 2023
95 SEBI Circular No. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2021/583 dated June 25, 2021
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**80% of (100% reduced to the extent of minimum stipulated liquid assets i.e.
10%), i.e. 80% of 90% of Net Assets.
5.7.3. In case, the exposure in such liquid assets / securities falls below the
threshold mandated at Paragraph 5.7.1 above, the AMCs shall ensure
compliance with the above requirement before making any further
investments.
5.7.4. AMCs shall ensure compliance with the framework specified by AMFI, in
consultation with the Board, for liquidity risk management for open ended
debt schemes (except Overnight Fund, Gilt Fund and 10-year constant
maturity gilt fund).
5.8. Swing pricing framework for mutual fund schemes96
5.8.1. Swing pricing framework shall be applicable to open ended debt mutual
fund schemes (except overnight funds, Gilt funds and Gilt with 10-year
maturity funds) only for scenarios related to net outflows from the
schemes. The same shall be a hybrid framework with:
(a) a partial swing during normal times and
(b) a mandatory full swing during market dislocation times for high risk
open ended debt schemes.
5.8.2. Swing pricing during normal times
(a) During normal times:
(i) AMFI shall prescribe broad parameters for determination of
thresholds for triggering swing pricing which shall be followed
by the AMCs. AMFI shall also prescribe an indicative range of
swing threshold to the industry for normal times.
(ii) Additionally, AMC may be allowed to have other parameters, if
it desires so, considering the nature and characteristics of the
mutual fund scheme.
(iii) During normal times, AMCs shall decide on the applicability of
swing pricing and the quantum of swing factor depending on
scheme specific issues.
(iv) Provision shall be disclosed by the AMC in SID with detailed
disclosures made in SAI97
(b) AMCs may, if they desire so, implement the swing pricing framework
during normal period, after incorporating clauses pertaining to the
96 SEBI Circular No. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2021/631 dated September 29, 2021 and SEBI Circular No.
SEBI/HO/IMD/IMD-II DOF3/P/CIR/2022/24 dated February 25, 2022, Refer SEBI letter No. SEBI/HO/ IMD-II/DOF3/
OW/P/2022/5274/1 dated February 08, 2021
97 SEBI Circular No. SEBI/HO/IMD/IMD-RAC-2/P/CIR/2023/000175 dated November 01, 2023.
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same in their SIDs and the same shall be considered as a
Fundamental Attribute Change of the scheme in terms of Regulation
22(9)(c).
5.8.3. Swing pricing during market dislocation
(a) For the purpose of determining market dislocation, AMFI shall
develop a set of guidelines/parameters/model for recommending the
same to the Board. The Board will determine ‘market dislocation’
either based on AMFI’s recommendation or suo moto. Once market
dislocation is declared, it will be notified by the Board that swing
pricing will be applicable for a specified period.
(b) Subsequent to the announcement of market dislocation, the swing
pricing framework shall be mandated only for open ended debt
schemes (except overnight funds, Gilt funds and 10-year constant
maturity gilt fund) in terms of Part IV of Chapter 3 of this Master
Circular, which:
(i) have High or Very High risk on the risk-o-meter in terms of
Paragraph 6.16 of this Master Circular (as of the most recent
period at the time of declaration of market dislocation); and
(ii) classify themselves in the cells A-III, B-II, B-III, C-I, C-II and C-
III of Potential Risk Class (PRC) Matrix in terms of Paragraph
6.18 of this Master Circular as tabulated below.
(c) A minimum swing factor as under shall be made applicable to the
schemes mentioned at Paragraph 5.8.3.(b) above and the NAV will
be adjusted for swing factor.
Table
Minimum swing factor for open ended debt schemes*
Max Credit Risk of Class A Class B Class C
scheme→ (CRV** (CR (CRV
V <10)
>=12)
Max Interest Rate
>=10)
Risk of the scheme ↓
Class I: (MD<=1 year) Optional Optional 1.5%
Class II: (MD<=3 Optional 1.25 1.75%
%
years)
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Class III: Any 1% 1.5 2%
Macaulay duration %
*Scheme can levy higher swing factor, based on pre-defined
parameters, redemption pressure and current portfolio of the scheme
subject to a cap on swing factor to be decided by AMC.
**CRV: Credit Risk Value
5.8.4. Re-opening of a scheme after announcement of winding-up98
(a) The swing pricing framework shall be applicable upon re-opening of
Scheme after announcement of winding up. In this regard, AMCs
shall adhere to the guidelines issued by AMFI, in consultation with
SEBI.
5.8.5. All the open ended debt schemes (except overnight funds, Gilt funds and
Gilt with 10-year maturity funds) mentioned at Paragraph 5.8.3.(b) shall
incorporate the provision pertaining to mandatory swing factor as
stipulated at Table above in their offer documents. Optional swing factor
or levying a swing factor higher than as specified in Table above shall be
considered as Fundamental Attribute Change of the scheme in terms of
Regulation 22(9)(c).
5.8.6. Other aspects pertaining to swing pricing
(a) When swing pricing framework is triggered and swing factor is made
applicable (during normal time or market dislocation, as the case may
be), both the incoming and outgoing investors shall get NAV adjusted
for swing factor.
(b) All AMCs shall make clear disclosures along with illustrations in the
SIDs including information on how the swing pricing framework
works, the circumstances under which it is triggered and the effect on
the NAV for incoming and outgoing investors.
(c) Swing pricing shall be made applicable to all unitholders at PAN level
with an exemption for redemptions upto Rs. 2 lakhs for each mutual
fund scheme during both normal times and market dislocation.
(d) AMCs shall put in place policies and procedures pertaining to swing
pricing, which shall be approved by board of AMC and Trustee.
(e) The scheme performance shall be computed based on unswung
NAV.
98 Mandated based on recommendation of Group of Experts and Mutual Fund Advisory Committee and AMFI Best Practice
Guidelines No. 135/BP/96-B/2024-25 dated November 04, 2024
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(f) AMCs shall disclose the NAV adjusted for swing factor along with the
performance impact in following format in their SIDs, scheme wise
Annual Reports and Abridged summary. The same shall also be
disclosed on their website prominently only if swing pricing framework
has been made applicable for the said mutual fund scheme:
Sr Period of Scheme Unswung Swing Whether
applicability of factor optional or
No. name NAV
swing pricing Mandatory
applied
5.9. Borrowings by Mutual Funds99
5.9.1. Intraday Borrowings: In terms of Regulation 42(1) and 42(2), the following
conditions shall be applicable for intraday borrowings by Mutual Funds:
(a) The policy for use of intraday borrowing facility shall be approved by
Board of AMC and Board of Trustees and shall be uploaded on the
website of AMC.
(b) Intraday borrowings shall be used only for the purpose of
repurchase or redemption of units or payment of interest or Income
Distribution cum Capital Withdrawal payout to the unitholders.
(c) The amount of intraday borrowings shall not exceed the guaranteed
receivables due on the same day from Government of India, Reserve
Bank of India and Clearing Corporation of India Limited. The following
receivables on the day of redemption shall be eligible for intraday
borrowings:
(i) Maturity proceeds from TREPS
(ii) Proceeds from Reverse Repo
(iii) Maturity proceeds from G-Sec/ T-bill/ SDL/ STRIPS
(iv) Interest on G-Sec/ SDL
(v) Sale proceeds of G-Sec/ T-bill/ SDL/ STRIPS
(d) AMCs shall ensure compliance of clauses 6 and 7 of Fourth Schedule
of MF Regulations and Paragraph 17.7 of this Master Circular.
(e) In line with Paragraph 11.10 of this Master Circular, cost of intraday
borrowing, if any, shall be borne by the AMC. Further, any loss or cost
incurred, on account of any unforeseen event or delay in receiving
99 SEBI Circular No. HO/(92)2026-IMD-POD-2/I/6961/2026 dated March 13, 2026
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the funds from receivables as mentioned at Paragraph 5.4 shall be
borne by the AMC.
5.9.2. Borrowing by equity-oriented index funds and equity-oriented ETFs:
(a) SEBI has introduced Closing Auction Session in the equity cash
segment of the Stock Exchanges vide circular reference no.
HO/47/11/11(3)2025-MRD-POD2/I/2765/2026 dated January 16,
2026.
(b) In this regard, the borrowings by equity-oriented index funds and
equity-oriented ETFs on account of under execution of sell trades on
the Stock Exchange in terms of Regulation 42(1) is permissible only
for the purpose of participation by such funds in the Closing Auction
Session in the equity cash segment of the Stock Exchanges with
effect from the date of applicability of the aforesaid SEBI circular
dated January 16, 2026 and in the manner specified therein.
5.10. Cyber Security and Cyber Resilience Framework for Mutual Funds/
AMCs100
5.10.1. All Mutual Funds/ AMCs shall comply with the applicable provisions of
Cybersecurity and Cyber Resilience Framework (CSCRF) for SEBI
Regulated Entities (REs), specified vide SEBI Circular no. SEBI/HO/ITD-
1/ITD_CSC_EXT/P/CIR/2024/113 dated August 20, 2024, including any
subsequent circulars/directions in this regard.
5.11. Technology Committee for Mutual Funds/ AMCs 101
5.11.1. In order to deal with various technology related issues, AMCs shall
constitute a Technology Committee comprising of experts proficient in
technology with at least one independent external expert with adequate
experience in the area of technology in Mutual Fund industry / BFSI.
5.11.2. The aforementioned committee shall, inter alia, review the cyber security
and cyber resilience framework for Mutual Funds / AMCs in terms of
Paragraph 5.10 above and also review the system audit related aspects
of AMCs in terms of Paragraph 7.25.3 of this Master Circular on system
audit framework for mutual funds / AMCs.
5.12. Reporting of Artificial Intelligence (AI) and Machine Learning (ML)
applications and systems offered and used by Mutual Funds102
5.12.1. Scope definition
100 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2019/12 dated January 10, 2019, Refer SEBI email dated February 17, 2021
& August 04, 2022. Refer SEBI letter No. SEBI/HO/IMD/IMD-TPD-1/P/OW/2023/16538 dated April 19, 2023 & SEBI letter No.
SEBI/HO/IMD/IMD-SEC-3/P/OW/2023/22970/1 dated June 06, 2023.
101 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2019/058 dated April 11, 2019
102 SEBI Circular No. SEBI/HO/IMD/DF5/CIR/P/2019/63 dated May 09, 2019
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(a) “AI” / “ML” refers to the terms “Artificial Intelligence” and “Machine
Learning” used as a part of the product offerings. In order to make
the scope of this section inclusive of various AI and ML technologies
in use, the scope also covers Fin-Tech and Reg-Tech initiatives
undertaken by market participants that involves AI and ML.
(b) Any set of applications / software / programs / executable / systems
(computer systems) – cumulatively called application and systems,
(i) that are offered to investors (individuals and institutions) or used
internally by Mutual Funds to facilitate investing and trading or
for any other purpose, OR
(ii) to disseminate investments strategies and advice, OR
(iii) to carry out compliance / operations / activities,
where AI / ML is portrayed as a part of the public product offering
or under usage for compliance or management purposes, is
included in the scope of this section.
(c) Technologies that are considered to be categorized as AI and ML
technologies in the scope of this section, are explained in Annexure
5.
5.12.2. Regulatory requirements
(a) All registered Mutual Funds offering or using applications or systems
as defined in the Annexure 5:
(i) should participate in the reporting process by completing the AI
/ ML reporting format as provided under Format No. 9A.
(ii) are required to fill in the form as per the Format No. 9A and
make submissions on quarterly basis within 15 calendar days of
the expiry of the quarter to AMFI.
(b) AMFI shall consolidate the information on AI / ML applications and
systems reported by Mutual Funds on quarterly basis and submit to
the Board at email id AIML_MF@sebi.gov.in within 30 calendar days
of the expiry of the quarter. AMFI shall ensure that confidentiality is
maintained regarding the information received by them from Mutual
Funds.
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CHAPTER 6: DISCLOSURES & REPORTING NORMS
Part I - DISCLOSURES
6.1. Portfolio Disclosures103
6.1.1. Mutual Funds/ AMCs shall disclose portfolio (along with ISIN) as on the
last day of the month for all their schemes on their respective website
and on the website of AMFI within 10 calendar days from the close of
each month in a user-friendly and downloadable spreadsheet format.
For debt schemes, such disclosure, including the yield of the instrument,
shall be disclosed on fortnightly basis within 5 calendar days of every
fortnight. The format for disclosure of portfolios is provided under Format
No. 4C.
6.1.2. In case of unit holders whose e-mail addresses are registered, AMCs
shall send such monthly/fortnightly statements of scheme portfolio to
such unitholders via email within the timelines prescribed above at
Paragraph 6.1.1. AMCs shall provide a feature wherein a link is provided
to investors to their registered email to enable the investor to directly
view/download only the portfolio of schemes subscribed by the said
investor, along with the scheme risk-o-meter, name of benchmark and
risk-o-meter of benchmark.
6.1.3. AMCs shall declare on their website the hosting of the
monthly/fortnightly statement of its schemes portfolio on their respective
website and on the website of AMFI and the modes such as SMS,
telephone, email or written request (letter) through which a unit holder
can submit a request for a physical or electronic copy of the statement
of scheme portfolio.
6.1.4. AMCs shall provide a physical copy of the statement of its scheme
portfolio, without charging any cost, on specific request received from a
unit holder.
6.1.5. AMCs may disclose additional information (such as ratios, etc.) subject
to compliance with the Advertisement Code.
6.2. Disclosure of derivatives104
6.2.1. For the purpose of uniform disclosure of investments in derivative
instruments by AMCs in monthly/fortnightly portfolio disclosure, annual
report or in any other disclosures, the format specified at Paragraph
6.1.1 (i.e. Format No. 4C) shall be followed.
103 SEBI Circular No. CIR/IMD/DF/21/2012 dated September 13, 2012, SEBI/HO/IMD/DF2/CIR/P/2018/92 dated June 05, 2018
and SEBI Circular No. SEBI/HO/IMD/DF3/CIR/P/2020/130 dated July 22, 2020, Refer SEBI email dated September 30, 2020,
Refer SEBI Email dated November 17, 2022
104 SEBI Circular Cir/ IMD/ DF/ 11/ 2010 dated August 18, 2010
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6.2.2. Further, while listing net assets, the margin amounts paid shall be
reported separately under cash or bank balances.
6.3. Unaudited Half Yearly Financials105
6.3.1. The publication of the unaudited half-yearly results shall be made as per
the Format No. 4A106. For the purpose of easy reference by the
investors, all mutual funds shall display unaudited half yearly results on
the respective websites of AMCs and the website of AMFI, in a user-
friendly, downloadable and machine readable format, within 1 month
after the end of each half year.
6.4. Annual Report107 or Abridged Summary108
6.4.1. The scheme wise annual report, in machine readable format, shall be
hosted on the website of the AMCs and on the website of AMFI. The
AMCs shall display the link prominently on their websites and make the
physical copies available to the unit holders, at their registered offices
at all times.
6.4.2. The websites of the AMCs shall also be linked with AMFI website so that
the investors and analyst(s) can access the annual reports of all mutual
funds at one place109.
6.4.3. AMCs shall send an email/SMS to all unitholders regarding the hosting
of scheme wise annual report on their website and on the website of
AMFI.
6.4.4. AMCs shall e-mail the scheme annual reports or abridged summary
thereof, in machine readable formats, to all such unit holders, whose
email addresses are registered with the Mutual Fund, within 4 months
from the date of closure of the relevant financial year.110 The said
communication shall also include details of modes such as SMS,
telephone, email or written request (letter), etc. through which unit
holders can submit a request for a physical copy of the scheme wise
annual report or abridged summary thereof.
6.5. Disclosure of large unit holdings111
6.5.1. The number of investors holding over 25% of the NAV112 in a scheme
and their total holdings in percentage terms shall be disclosed in the
105 SEBI Circular MFD/CIR/1/200/2001 dated April 20, 2001 & SEBI Circular No. IMD/CIR No.8/132968/2008 dated July 24,
2008
106 Regulation 70(2) of SEBI (Mutual Funds) Regulations, 2026
107 For format of abridged scheme wise report, please refer Format No. 4B under the section on formats
108 SEBI Circular No. IMD/CIR No.8/132968/2008 dated July 24, 2008, Circular No. Cir/IMD/DF/16/2011 dated September 08,
2011 and SEBI/HO/IMD/DF2/CIR/P/2018/92 dated June 05, 2018, Refer SEBI letter No. SEBI/HO/IMD-
II/DoF8/OW/P/05031/2022- dated February 07, 2022
109 SEBI Cir No – MFD/CIR/15/041/2002 dated March 14,2002
110 SEBI/HO/IMD/IMD-II DOF3/P/CIR/2021/621 dated August 31, 2021
111 SEBI Circular No. MFD/CIR No.3/211/2001 dated April 30, 2001.
112 For further details, refer Part II – Scheme Governance in the Chapter 7 on ‘Governance Norms’
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Statement of Accounts issued after the NFO and also in the Half Yearly
and Annual Results113.
6.6. Disclosure of Asset Under Management (AUM)114
6.6.1. Whenever an AMC discloses AUM of the schemes of a Mutual Fund, it
shall provide:
(a) a bifurcation of the AUM by category (e.g.
debt/equity/hybrid/lifecycle/others etc.) and
(b) the geographical distribution of AUM (i.e. percentage of AUM from
top 5 cities, next 10 cities, next 20 cities, next 75 cities and others)
Such disclosures shall be made on their respective websites and
submitted to AMFI, which in turn shall publish industry wide figures on its
website.
6.6.2. AMCs shall disclose the following on a monthly basis on their websites
(in spreadsheet format) and furnish the same to AMFI115 within 7
working days from the end of the month:
(a) Monthly AAUM116 from different categories of schemes such as
equity schemes, debt schemes, etc.
(b) Contribution to Monthly AAUM from B-30117 cities (i.e. other than
top 30 cities as identified by AMFI) and T-30 cities (Top 30 cities).
(c) Contribution to Monthly AAUM from sponsor and its associates.
(d) Contribution to Monthly AAUM from entities other than sponsor
and its associates.
(e) Contribution to Monthly AAUM by type of investor (retail,
corporate, etc.) across scheme types (equity, debt, ETF, etc.).
(f) Monthly AAUM garnered through sponsor group/ non-sponsor
group distributors.
(g) State-wise/Union Territory-wise contribution to Monthly AAUM.
6.6.3. For a comprehensive view, Mutual Fund wise and consolidated data on
the above parameters shall also be disclosed on the website of AMFI in
the prescribed Format No. 4D.
6.7. Disclosure of Commission118
113 Refer Format No. 4A & 4B under the section on Formats
114 SEBI Circular No. Cir/IMD/DF/13/2011 dated August 22, 2011
115 SEBI Circular No. CIR/IMD/DF/05/2014 dated March 24, 2014
116 SEBI Circular No. CIR/IMD/DF/07/2014 dated April 2, 2014
117 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2018/16 dated February 02, 2018, Refer SEBI letter No.
SEBI/HO/IMD/DF2/OW/P/2019/26551/1 dated October 09, 2019.
118 SEBI Circular No. Cir/IMD/DF/13/2011 dated August 22, 2011
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6.7.1. Mutual Funds / AMCs shall disclose on their respective websites, the
total commission and expenses paid to distributors who satisfy one or
more of the following conditions with respect to non-institutional (retail
and HNI) investors: -
(a) Multiple point of presence (More than 20 locations)
(b) AUM raised over Rs.100 crores across industry in the non-
institutional category but including high net worth individuals
(HNIs).
(c) Commission received of over Rs.1 crore p.a. across industry
(d) Commission received of over Rs.50 lakhs from a single Mutual
Fund/AMC.
6.7.2. Mutual Fund / AMCs shall, in addition to the total commission and
expenses paid to distributors, make additional disclosures119 regarding
distributor-wise gross inflows (indicating whether the distributor is an
associate or group company of the sponsor(s) of the mutual fund), net
inflows, average assets under management and ratio of AUM to
gross inflows on their respective website on an annual basis.
6.7.3. In case the data mentioned above suggests that a distributor has an
excessive portfolio turnover ratio, i.e. more than two times the industry
average, AMCs shall conduct additional due-diligence of such
distributors.
6.7.4. AMCs shall also submit the data mentioned in Paragraph 6.7.1 and
6.7.2 to AMFI and the consolidated data in this regard shall be disclosed
on AMFI website.
6.8. Scheme Related Disclosures120
6.8.1. SID and KIM for each MF scheme managed by AMC and SAI shall be
made available on MFs / AMCs website.
6.8.2. AMCs shall have a dashboard on their website providing performance
and key disclosures pertaining to each scheme managed by the AMC.
The information shall be provided in a comparable, downloadable
(spreadsheet) and machine readable format and shall include scheme’s
AUM, investment objective, expense ratios, portfolio details, scheme’s
past performance, among others.
6.9. Disclosure of scheme performance121
119 SEBI Circular No. CIR/IMD/DF/21/2012 dated September 13, 2012.
120 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2016/42 dated March 18, 2016
121 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2018/137 dated October 22, 2018
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6.9.1. AMCs shall disclose the performance of all schemes on the website of
AMFI in the following manner:
(a) In case of all schemes, the scheme returns vis-à-vis the
benchmark return (Total Return Index) shall be disclosed in terms
of CAGR for various periods viz. 1 year, 3 year, 5 year, 10 year
and since inception. Such disclosure of performance (since
inception) shall be made since the date of allotment of the units in
the scheme122.
Provided123 that all schemes that are in existence for less than one
year, other than overnight fund, liquid fund, ultrashort duration
fund, low duration fund, and money market fund as defined in Part
IV of Chapter 3 on of this Master Circular, shall be exempted from
the aforesaid disclosure.
(b) In addition to the above, in case of schemes falling in categories
such as overnight fund, liquid fund, ultrashort duration fund, low
duration fund, and Money Market Fund as defined in Part IV of
Chapter 3 of this Master Circular, scheme performance is also to
be disclosed for a period of 7 days, 15 days, 1 month, 3 months
and 6 months.
(c) The said disclosure shall be made for all plans and shall be
updated daily based on previous day NAV.
(d) The said disclosure should be in investor friendly format which can
be filtered based on scheme-type, plan-type, etc. and sorted based
on return periods.
(e) 124The disclosure shall include other important fields such as
scheme AUM (excluding overnight and liquid scheme) and
previous day NAV. In case of AUM of overnight and liquid
schemes, the closing AUM and the AAUM of the previous month
has to be disclosed on AMFI website on daily basis.
However, the day the AUM movement (both upward and downward)
of both overnight and liquid scheme is more than 10% cumulatively
from the previous disclosed AUM, the AUM of that day has to be
disclosed. Such disclosed AUM becomes the reference AUM for
future disclosure of AUM for the month.
Further, it has been decided that an appropriate disclosure regarding
the AUM of overnight and liquid schemes disclosed on AMFI website
122 SEBI Circular No.SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021
123 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2019/42 dated March 25, 2019
124 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2019/42 dated March 25, 2019
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on monthly basis including the trigger limit of 10% is to be made as
an explanation through footnote.
(f) Trustees and AMCs shall ensure compliance with the provisions
mentioned at Paragraph 6.9 above and trustees shall confirm the
same to SEBI in the half yearly trustee report.
6.10. Disclosure of Risk adjusted Return (RAR) - Information Ratio (IR)125
6.10.1. In order to bring more transparency in disclosures made by AMCs and
aid better decision making by investors, IR shall be disclosed as a
financial metric to measure the RAR of a scheme portfolio.
(a) Disclosure of Information Ratio
(i) Mutual Funds/ AMCs shall disclose IR of equity schemes’
portfolios on their website along with performance
disclosures, on a daily basis.
(ii) AMFI shall ensure that such disclosure shall be available on
its website in a comparable, downloadable (spreadsheet)
and machine readable format.
(b) Methodology for calculation of IR
(i) IR shall be calculated as under:
(Portfolio Rate of Returns less Benchmark Rate of Returns) /
Standard Deviation of Excess Return
Excess Return= Portfolio Rate of Returns less Benchmark
Rate of Returns
(ii) Benchmark used in the above formula shall be the Tier 1
benchmark currently used by the equity oriented Mutual Fund
schemes.
(iii) Volatility/Standard deviation shall be calculated on the basis
of daily return values.
(iv) Daily portfolio return shall be calculated using arithmetic
function
(c) Awareness amongst Investors
(i) Adequate steps shall be undertaken by AMCs and AMFI to
educate investors about RAR, IR and their significance in
scheme performance evaluation.
125 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-2/P/CIR/2025/6 dated January 17, 2025
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(ii) An amount shall be earmarked from the budget for investor
education, leveraging social/mass media channels to
maximize outreach and impact
(d) Format for disclosure:
(i) The IR shall be disclosed on the websites of AMCs and AMFI
as per Format No. 7H.
(ii) In the aforesaid format, a hyperlink to the AMFI website for
IR column shall be embedded, providing clear and concise
explanation on the following, in easy-to-understand
language:
(I) Explaining IR
(II) Formula for calculation of IR
(III) Interpretation of IR with sufficient illustrations covering
various scenarios.
(iii) In order to ensure uniformity in explanation of IR across the
MF industry, AMCs shall provide a hyperlink in the aforesaid
format on their websites, redirecting to the AMFI website
providing detailed explanation of IR.
6.11. Annual Report of the AMC126
6.11.1. The annual report containing accounts of the AMC shall be displayed in
a machine readable format on the website of the mutual fund
immediately after approval in Annual General Meeting but not later than
four months from the date of closure of the financial year. It shall also
be mentioned in the annual report of mutual fund schemes that the
unitholders, if they so desire, may request for the annual report of the
AMC.
6.12. Submission of bio data of key personnel127
6.12.1. AMCs shall submit the bio data of all key personnel as per the Format
No. 1F to Trustees and the Board.
6.12.2. 128The term “Key Personnel” is defined as under:
(a) “Chief Executive Officer (CEO), Chief Investment Officer (CIO),
Chief Risk Officer (CRO), Chief Information Security Officer
(CISO), Chief Operation Officer (COO), Fund Manager(s),
Compliance Officer, Sales Head, Investor Relation Officer(s)
126 MFD/CIR/9/120/2000 dated November 24, 2000 and SEBI Circular No.SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March
04, 2021
127 IIMARP/CIR /08/845/97 dated May 7,1997, IIMARP/MF/CIR/05/788/97 date April 28,1997
128 SEBI Circular No.SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021
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(IRO), heads of other departments, Dealer(s) of the AMC and such
other persons as deemed fit and identified as such by the AMC
and the Trustees.”
6.13. Disclosure Of Executive Remuneration129
6.13.1. MFs /AMCs shall make the following disclosures pertaining to a financial
year on the MF/AMC website under a separate head – 'Remuneration',
within one month from the end of the respective financial year:
(a) Name, designation and remuneration of
(i) Chief Executive Officer (CEO), Chief Investment Officer
(CIO) and Chief Operations Officer (COO) or their
corresponding equivalent by whatever name called.
(ii) top ten employees in terms of remuneration drawn for that
financial year.
(iii) every employee of MF/AMC whose:
(I) Annual remuneration was equal to or above one crore
and two lakh rupees for that financial year;
(II) Monthly remuneration in the aggregate was not less
than eight lakh and fifty thousand rupees per month, if
the employee is employed for a part of that financial
year.
(b) The ratio of CEO’s remuneration to median remuneration of
MF/AMC employees.
(c) MF's total AAUM, debt AAUM and equity AAUM and rate of growth
over last three years.
6.13.2. For this purpose, remuneration shall mean remuneration as defined in
clause (78) of section 2 of the Companies Act, 2013.
6.14. Disclosure of investor complaints with respect to Mutual Funds130
6.14.1. Mutual Funds shall disclose details of investor complaints received by
them from all sources, on their websites131 and on the website of AMFI
on a monthly basis as per Format No. 7D, by 7th calendar day of the
succeeding month. The same shall be disclosed in their Annual Reports.
The said details in the annual report shall be vetted and signed off by
the Trustees of the concerned Mutual Fund.
129 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2016/42 dated March 18, 2016 and
SEBI/HO/IMD/DF2/CIR/P/2017/35 dated April 28, 2017
130 SEBI Circular No. Cir /IMD/DF/2/2010 dated May 13, 2010. Refer SEBI letter No. SEBI/HO/OW/IMD/IMD-
SEC1/P/2024/10975/1 dated March 19, 2024
131 SEBI Circular No. SEBI/HO/IMD-II/IMD-II_DOF10/P/CIR/2021/00677 dated December 10,2021
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6.14.2. The AMCs shall include the aforesaid report in their annual reports, as
part of the Report of the Trustees.
6.14.3. Further, in order to facilitate awareness amongst investors about various
activities related to mutual fund investments, the Board has prepared an
Investor Charter, provided at Format No. 9D, for Mutual Funds, inter-
alia, detailing the services provided to Investors, Rights of Investors,
various activities of Mutual Funds with timelines, DOs and DON’Ts for
Investors and Grievance Redressal Mechanism.
6.14.4. Mutual Funds shall bring the Investor Charter for Mutual Funds to the
notice of their unit holders (existing as well as new unit holders) by
disclosing the Investor Charter on their websites, making them available
at prominent places in the office, etc.
6.14.5. Further, Mutual Funds shall display link/option to lodge complaint with
them directly on their websites and mobile apps. Additionally, link to
SCORES website/ link to download mobile app (SEBI SCORES) shall
also be provided on their website.
6.15. Brokerage and commission paid to associates132
6.15.1. Brokerage and commission paid to associates/related parties/group
companies of sponsor/AMC shall be disclosed in the unaudited half
yearly financial results, the abridged scheme wise annual report and the
SAI, as per Format No. 7B.
6.16. Product Labelling in Mutual Funds133
6.16.1. All the mutual funds shall ‘Label’ their schemes on the parameters as
mentioned under:
(a) Nature of scheme such as to create wealth or provide regular
income in an indicative time horizon (short/ medium/ long term).
(b) A brief about the investment objective (in a single line sentence)
followed by kind of product in which investor is investing
(Equity/Debt).
(c) The depiction of risk shall be through pictorial meter named
"Riskometer" and this meter shall appropriately depict the level of
risk in any specific scheme.
(d) Risk-o-meter shall have following six levels of risk for mutual funds
[with the given colour scheme134
132 SEBI Circular No. SEBI/IMD/CIR No 18/198647/2010 dated March 15, 2010
133 SEBI Circular No. CIR/IMD/DF/5/2013 dated March 18, 2013
134 SEBI Circular No. CIR/IMD/DF/4/2015 dated April 30, 2015, Circular No. SEBI/HO/IMD/DF3/CIR/P/2020/197 Dated October
05, 2020 and SEBI Circular No. SEBI/HO/IMD/PoD1/CIR/P/2024/150 dated November 05, 2024
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(i) Low risk- Irish Green [#08A04B]135
(ii) Low to Moderate risk- Chartreuse [#7FFF00]
(iii) Moderate risk- Neon Yellow [#FFFF33]
(iv) Moderately High risk-Caramel [#C68E17]
(v) High – risk-Dark Orange [#FF8C00]
(vi) Very High risk.- Red [#F70D1A]
(e) The above given colour scheme of risk-o-meter shall be applicable
for all digital and polychrome printed promotion
materials/disclosures for the schemes.
(f) Riskometer: Risk level of the scheme shall be depicted by “Risk-o-
meter”, as given below136:
The risk of the scheme/benchmark is [level of risk]
For example, the risk depicted in the above risk-o-meter is
Moderately High.
(g) The detailed guidelines for evaluation of risk levels of a scheme
along with few examples are provided at Annexure 10137.
Pursuant to calculation of risk value of the scheme portfolio based
on the methodology specified in Annexure 10, risk level of a
scheme as mentioned at Table 11 of Annexure 10 shall be
depicted by risk-o-meter shown above at Paragraph 6.16.1(f).
(h) Based on the scheme characteristics, Mutual Funds shall assign
risk level for schemes at the time of launch of scheme/NFO.
(i) Any change in risk-o-meter of the scheme or its benchmark shall
be communicated by way of Notice cum Addendum and by way of
an e-mail or SMS to unitholders of that particular scheme. The
135 HTML Color Code
136 SEBI Circular no. SEBI/HO/IMD/PoD1/CIR/P/2024/150 dated November 05, 2024
137 SEBI Circular no. SEBI/HO/IMD/DF3/CIR/P/ 2020/197 dated October 05, 2020, Refer SEBI letter no. SEBI/HO/IMD-
II/DOF3/OW/P/2021/1566/1 dated January 19, 2021
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format for disclosure of change in Risk-o-meter shall be as
under138:
Name of Existing Risk-o-meter of Revised Risk-o-meter of
the Scheme/Benchmark Scheme/Benchmark
Scheme(s
)
XXXX
Large and
Midcap
Fund
The risk of the scheme is The risk of the scheme is very
moderately high high]
(j) Risk-o-meter shall be evaluated on a monthly basis and Mutual
Funds/AMCs shall disclose the Risk-o-meter along with portfolio
disclosure for all their schemes on their respective website and on
AMFI website within 10 calendar days from the close of each
month.
(k) Mutual Funds shall disclose the risk level of schemes as on March
31 of every year, along with number of times the risk level has
changed over the year, on their website and AMFI website.
(l) Mutual Funds shall publish the following table of scheme wise
changes in Risk-o-meter in scheme wise Annual Reports and
Abridged summary:
Scheme Risk-o-meter Risk-o-meter Number of
name level at start level at end of changes in
of the the financial Risk-o-meter
financial year year during the
financial year
(m) A disclaimer shall be given stating that investors should consult
their financial advisers if they are not clear about the suitability of
the product.
138 SEBI Circular No. SEBI/HO/IMD/PoD1/CIR/P/2024/150 dated November 05, 2024
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6.16.2. Risk value of commodities for risk-o-meter139: For evaluation of risk
value of commodities in which mutual funds are permitted to invest, in
terms of Paragraph 6.16.1(g), investment in commodities by mutual fund
schemes shall be assigned a risk score corresponding to the annualized
volatility of the price of the said commodity. The annualized volatility
shall be computed quarterly based on past 15 years’ prices of
benchmark index of the said commodity and risk score for the
commodity shall be in terms of the following table:
Annualized volatility Risk value on risk-o-meter (Risk)
<10% 3 (Moderate)
10-15% 4 (Moderately High)
15-20% 5 (High)
>20% 6 (Very high)
Illustration: If price of gold has annualized volatility of 18% based on price
of gold of past 15 years, then Gold and gold related instruments will have
risk value of 5 (High) on risk-o-meter.
6.16.3. Product label shall be disclosed in:
(a) Front page of initial offering application forms, SID and KIM.
(b) Common application form – along with the information about the
scheme.
(c) The product label with respect to Paragraph 6.16.3(a) & 6.16.3.(b)
shall be placed in proximity to the caption of the scheme and shall
be prominently visible.
(d) Scheme advertisements - placed in a manner so as to be
prominently visible to investors.
6.16.4. Change in risk-o-meter shall not be considered as a Fundamental
Attribute Change of the scheme in terms of Regulation 22(9)(c).
6.17. Risk-O-Meter related disclosures
6.17.1. 140Mutual Funds/AMCs shall include the following in all disclosures,
including promotional material or any other disclosures stipulated by the
Board:
139 SEBI Circular no. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2022/49 dated April 11, 2022
140 SEBI/HO/IMD/IMD-II DOF3/P/CIR/2021/621 dated August 31, 2021
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(a) risk-o-meter of the scheme wherever the performance of the
scheme is disclosed
(b) risk-o-meter of the scheme and benchmark wherever the
performance of the scheme vis-à-vis that of the benchmark is
disclosed.
6.17.2. AMCs shall disclose risk-o-meter of the scheme and benchmark on:
(a) Front page of initial offering application form, SID and KIM; and
(b) Common application form – along with the information about the
scheme141.
6.17.3. The disclosure requirement of the risk-o-meter of benchmark is
applicable for primary benchmark which is specified in the SID.
6.17.4. For international benchmarks, risk-o-meter score may be assigned in
line with risk-o-meter score assigned to foreign securities as specified in
Paragraph 6.16 of this Master Circular.
6.17.5. AMCs shall enter into arrangements with their selected Index providers
to provide the risk-o-meter for their benchmarks to the AMCs latest by
the 5th calendar day of the succeeding month.
6.18. Potential Risk Class (PRC) Matrix142
6.18.1. All debt mutual fund schemes shall be classified in terms of a PRC
matrix consisting of parameters based on maximum interest rate risk
(measured by Macaulay Duration (MD) of the scheme) and maximum
credit risk (measured by Credit Risk Value (CRV) of the scheme).
6.18.2. While the AMCs shall continue to retain the same category of their
schemes as per Part IV of Chapter 3 of this Master Circular they shall
have full flexibility to place single/multiple schemes in any cell of the
PRC.
6.18.3. Each scheme shall be placed in one of the 9 cells specified at table
under Paragraph 6.18.10 below, while retaining their existing scheme
category as per Part IV of Chapter 3 of this Master Circular.
6.18.4. Once a PRC cell selection is done by the scheme, any change in the
positioning of the scheme into a cell resulting in a risk (in terms of credit
risk or duration risk) which is higher than the maximum risk specified for
the chosen PRC cell, shall be considered as a fundamental attribute
change of the scheme in terms of Regulation 22(9)(c).
141 Inserted by SEBI Circular No. SEBI/HO/IMD/IMD-RAC-2/P/CIR/2023/000175 dated November 01, 2023
142 SEBI Circular No. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2021/573 dated June 07, 2021
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6.18.5. Further, the Mutual Funds shall inform the unitholders about the
abovementioned classification in one of the 9 cells and subsequent
changes, if any, through SMS and by providing a link on their website
referring to the said change.
6.18.6. The thresholds for the values of the interest rate risk and the credit risk
dimensions would progress in a flexible manner for drawing out the
categorization matrix. The thresholds across the matrix would determine
the maximum interest rate risk and the maximum credit risk which the
scheme would be permitted to take but the scheme would have the
flexibility to move downwards on the risk scale. The thresholds in this
regard are given below:
(a) Maximum Weighted Average Interest Rate Risk of the scheme
(measured in terms of Macaulay Duration):
(i) Class I: MD<= 1 year;
(ii) Class II: MD<=3 years;
(iii) Class III: Any Macaulay duration
(b) Maximum Weighted Average Credit Risk of the scheme
(measured in terms of Credit Risk Value as specified Table under
Paragraph 6.18.8 below):
(i) Class A: CRV >=12
(ii) Class B: CRV >=10
(iii) Class C: CRV <10143
6.18.7. The Credit Risk Value of the scheme shall be the weighted average of
the credit risk value of each instrument in the portfolio of the scheme,
the weights based on their proportion to the AUM. Similarly, Macaulay
Duration at the scheme level shall be the weighted average of the
Macaulay Duration of each instrument in the portfolio with the weights
being based on their proportion to the AUM. The value of the debt
instrument to be considered for calculating AUM shall include the
accrued interest i.e. dirty price of the instrument.
6.18.8. The debt securities of schemes are to be assigned a value for credit risk
in the following manner:
143 Investments by mutual funds are permitted only in investment grade securities in terms of regulation 41(1) read with
Schedule VI of SEBI Mutual Fund Regulations, 2026
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Instrument CREDIT RISK VALUE
(CRV)
G-Sec/ State development loans/ Repo 13
on Government Securities/TREPS /
Cash
AAA 12
AA+ 11
AA 10
AA- 9
A+ 8
A 7
A- 6
BBB+ 5
BBB 4
BBB- 3
Unrated 2
Below investment grade 1
6.18.9. For investment by mutual funds in instruments having short term ratings,
the credit risk value shall be based on the lowest long term rating of an
instrument of the same issuer as shown above (in order to follow a
conservative approach) across credit rating agencies. However, if there
is no long term rating of the same issuer, then based on credit rating
mapping of CRAs between short term and long term ratings, the most
conservative long term rating shall be taken for a given short term rating.
6.18.10. For the purpose of nomenclature, the 3 x 3 matrix shall have the
following syntax for each matrix cell:
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Max Credit
Risk of
scheme→
Class A(CRV Class B (CRV Class C (CRV
>=12) >=10) <10)
Max Interest
Rate Risk of
the scheme ↓
Relatively
Low Interest Relatively Low
Class I: Rate Risk and Relatively Low interest rate
(MD<=1 year) Relatively interest rate risk risk and
Low Credit and moderate Relatively High
Risk Credit Risk Credit Risk
Moderate
interest rate Moderate
Class II:
risk and Moderate interest interest rate
(MD<=3
Relatively rate risk and risk and
years)
Low Credit moderate Credit Relatively High
Risk Risk Credit Risk
Relatively
High interest Relatively High
Class III: Any
rate risk and Relatively High interest rate
Macaulay
Relatively interest rate risk risk and
duration
Low Credit and moderate Relatively High
Risk Credit Risk Credit Risk
6.18.11. For example, if an open ended Short Duration Fund wants to invest in
securities such that its Weighted Average Macaulay Duration is less
than or equal to 3 years and its Weighted Average Credit Risk Value is
10 or more, it would be classified as a scheme with ‘Moderate Interest
Rate Risk and Moderate Credit Risk’. The position of the scheme in the
matrix shall be displayed by the AMCs as under:
Potential Risk Class
Credit Risk → Relatively Moderate Relatively High
Low (Class (Class B) (Class C)
Interest Rate Risk↓ A)
Relatively Low (Class I)
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Moderate (Class II) B-II
Relatively High (Class
III)
6.18.12. The maximum interest rate risk which the aforesaid scheme can take
would be in terms of the Weighted Average Macaulay Duration of the
scheme and the same shall be ≤ 3 years. The maximum Weighted
Average Credit Risk which the aforesaid scheme can take would have
Credit Risk Value of 10 or more. Both the maximum interest rate risk
and maximum credit risk would be reflected in the above matrix. By
virtue of its placement in this position, the scheme would have the
flexibility to take interest rate risk and credit risk below the maximum risk
as stated above in table under Paragraph 6.18.10 above.
6.18.13. The type of the scheme shall be modified to include the above cell
selection. For the above example, it shall be as under:
An open ended short term debt scheme investing in instruments with
Macaulay duration between 1 year and 3 years (please refer to page
no.__) #. A moderate interest rate risk and moderate Credit Risk.
6.18.14. For a scheme placing itself in Class I (i.e. MD <=1 year), the maximum
residual maturity of each instrument held by the scheme shall be three
years. For a scheme placing itself in Class II (i.e. MD <=3 years), the
maximum residual maturity of each instrument held by the scheme shall
be seven years. A scheme placing itself in Class III can invest in
instruments of any maturity. For securities issued by central government
and state governments, the cap pertaining to maximum residual maturity
of each instrument for Class I and Class II shall not be applicable.
6.18.15. With regards to existing holding of perpetual bonds by debt schemes as
on June 07, 2021, (including debt instruments with special features viz.
subordination to equity which absorbs losses before equity capital and
/or convertible to equity upon trigger of a pre-specified event for loss
absorption, for instance Additional Tier I bonds issued under Basel III
framework), it has been decided that AMCs shall:
(a) Reckon such bonds as having residual maturity as outlined in
Paragraphs 5.5.3, 10.4 & Item No. 9 under Paragraph 13.1.
(b) Grand-father existing investments in such instruments with the
following provision:
(i) Calculation of Macaulay Duration of the scheme to follow the
guidelines in terms of Paragraphs 5.5.3, 10.4 & Item No. 9
under Paragraph 13.1.
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(ii) If the scheme places itself in Class I or II, and the MD
exceeds the stipulated level, then it would be treated as a
passive breach and a suitable period may be permitted for
regularizing the passive breach. Until regularization, the
scheme cannot make any investments that would effectively
increase the MD of the portfolio. Calculation of MD for this
purpose shall be post exclusion of such instruments having
special features. To clarify, if a scheme AUM is INR 100
crores, of which INR 10 crores is in such instruments with
special features, the base for calculation of MD for the
purpose of PRC will be INR 90 crores. The scheme will
continue to maintain the threshold of the cell in which it is
positioned on INR 90 crores in line with Class I &/or Class II
categorization in line with these provisions.
6.18.16. AMCs shall update their SIDs to reflect the fact that placement of the
scheme in one of the cells of PRC matrix does not reflect the scheme
holdings pertaining to the aforementioned perpetual bonds with respect
to the MD and maturity thresholds specified above, till the time such
bonds are held by the scheme, for pre-existing holding of
aforementioned perpetual bonds by debt schemes as on June 07, 2021.
6.18.17. Fresh investments in perpetual bonds (including Additional Tier 1
bonds) shall only be made in schemes that are in Class III.
6.18.18. For the debt instruments with call / put options, the deemed maturity will
be in terms of Paragraph 10.3. For instruments with interest rate reset
dates, the interest rate reset date shall not be treated as deemed
maturity.
6.18.19. Mutual Funds shall publish the aforesaid matrix in their scheme wise
Annual Reports and Abridged Summary.
6.18.20. The aforesaid matrix along with the mark for the cell in which the scheme
resides shall be disclosed on:
(a) front page of initial offering application form, SID and KIM
(b) common application form – along with the information about the
scheme.
(c) the PRC matrix with appropriate mark with respect to Paragraphs
6.18.20(a) & 6.18.20(b) above shall be placed in proximity to the
caption of the scheme and shall be prominently visible and in bold.
(d) Scheme advertisements – placed in manner by the Mutual Fund
and its distributors so as to be prominently visible to investors.
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6.19. Separate disclosures for Regular and Direct plans144
6.19.1. For all other regulatory disclosures where expenses, expense ratio,
returns and/or yield of the schemes are required to be disclosed,
separate disclosures shall be made for both regular and direct plans.
144 SEBI Circular No. SEBI/HO/IMD/PoD1/CIR/P/2024/150 dated November 05, 2024
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Part II - REPORTS
6.20. Monthly Cumulative Report (MCR)145
6.20.1. Date and Mode of Submission:
(a) MCR shall be submitted to the Board as per Format No. 3D by 3rd
working day of each month by way of an email (to email ID:
mfdata@sebi.gov.in).
(b) In case of Mutual Fund scheme investing (i.e. investing scheme)
certain percentage of its AUM in schemes of same Mutual Fund or
other Mutual Funds (i.e. investee schemes), the investing scheme
shall exclude the investments in investee schemes while reporting
the data on AUM in the MCR146.
6.20.2. Other Guidelines:
(a) Details of the new schemes launched shall be reported in the MCR
for the month in which the allotment is done. For example, if an
NFO closes in the month of July and the allotment is done in the
month of August, then, the details of the new scheme shall be
reported in the MCR for the month of August that is to be submitted
to the Board by 3rd of September.
(b) Further, additional report on overseas investment147 by Mutual
Funds in ADRs/GDRs, foreign securities and overseas exchange
traded funds (ETFs) shall also be provided as Format No. 3I.
(c) Compliance officers of AMCs shall take due care while submitting
the MCR data to the Board and shall confirm that the data
submitted is correct and does not require any revision.
6.21. New Scheme Report (NSR)148
6.21.1. All Mutual Funds shall submit the NSR to the Board, complete in all
respects as per the Format No. 3A, within 10 working days from the date
of allotment. Mutual funds shall confirm compliance with the provisions
of Regulation 24(4) while filing the NSR149.
145 SEBI circular MFD/CIR/07/206/2001 dated July 19, 2001, SEBI circular No IMD/Cir No.15/87045/2007 dated February 22,
2007, SEBI circular SEBI/IMD/CIR No 3/124444/08 dated April 30, 2008, SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2016/42
dated March 18, 2016, SEBI/HO/IMD/DF3/CIR/P/2019/020 dated January 22, 2019 and SEBI Circular No.
SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021
146 SEBI Circular No. SEBI/HO/IMD/DF3/CIR/P/2019/020 dated January 22, 2019
147 SEBI Circular No. SEBI/IMD/CIR NO 15/87045/07 dated February 22,2007
148 SEBI Circular No. SEBI/IMD/CIR NO 13/118899/08 dated February 29, 2008, SEBI Circular No MFD/CIR/12/16588/2002
dated August 28, 2002, SEBI Circular No. MFD/CIR/09/247/2002 dated July 23, 2002, SEBI Circular No. IIMARP/10772/93
dated July 14,1993,
149 SEBI Circular No. SEBI/IMD/CIR No.9/74364/06 dated August 14, 2006
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6.22. Quarterly Compliance Test Reports (CTR)150
6.22.1. The CTRs, as per Format No. 3B, shall be submitted by the AMC to the
Board on a quarterly basis, by 21st calendar day of succeeding month
for each calendar quarter. AMCs are advised to incorporate the
modifications/additions under the relevant sections of the format, based
on amendments to the MF Regulations/circulars/guidelines issued from
time to time.
6.23. Half Yearly Trustee Report by Trustees (HYTR)151
6.23.1. The Trustees shall submit HYTR to the Board, as per Format No. 3C,
within two months from the end of each half-year (i.e. September and
March). The Trustees shall also submit corrective steps taken with
respect to the non-compliance reported in the HYTR.
6.24. Quarterly Report by AMC to Trustees (QR)152
6.24.1. The AMC shall submit QR to the trustees, as required in Regulation
7(a)(i) of MF Regulations, on its activities and the compliance with MF
Regulations and various circulars issued thereunder as per Format No.
3G. The same shall be submitted by AMC to Trustees by 21st calendar
day of succeeding month for each calendar quarter.
6.25. Annual Statistical Report (ASR)153
6.25.1. AMC shall submit the annual statistical report to the Board, as per
Format No. 3E, by 30th of April each year. The ASR shall be submitted
to the Board through email (to email ID: mfdata@sebi.gov.in)154.
6.26. Daily Transaction Report155
6.26.1. All Mutual Funds shall submit details of transactions in secondary
market (i.e. total purchases/ sales of equity/ debt and not of each scrip)
to the Board on daily basis as per Format No. 3F. Accordingly, AMCs
shall make necessary arrangements with their custodians for the
submission of aforesaid report. Further, the information on total
purchases/sales of sensitive index scrips need not be included in the
report.
6.26.2. Compliance officers of the custodians as well as that of AMCs shall
ensure that the information submitted is correct and reaches the Board
by 3.00 p.m. on the following working day (T+1).
150 SEBI Circular No. SEBI/IMD/CIR NO 6/98057/07 dated July 5, 2007, SEBI Circular No MFD/CIR/11/36222/2005 dated
IIMARP/MF/CIR/10/1076/97 dated March June 16, 2005, 05,1997 SEBI Circular No & SEBI Circular No.MFD/CIR/5/360/2000
dated July 4, 2000, Refer SEBI email dated July 09, 2021
151 SEBI/HO/IMD/IMD-I DOF2/P/CIR/2021/550 dated April 12, 2021
152 SEBI/HO/IMD/IMD-I DOF2/P/CIR/2021/550 dated April 12, 202
153 IIMARP/CIR /08/845/97 dated May 7,1997, MFD/CIR/02/110/02 dated April 26,2002
154 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021
155 SEBI Circular No. MFD/CIR/07/384/99 dated December 17, 1999 and MFD/CIR/08/23026/99 dated December 23, 1999
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6.27. Responsibilities of AMC(s) and Trustees156
6.27.1. All information and documents relating to the compliance process shall
be authenticated and/or adopted by the Board of the AMC(s) to
strengthen the compliance mechanism.
6.27.2. The Trustee(s) shall also review all information and documents received
from the AMC(s) as required under the compliance process.
6.27.3. AMC(s) shall develop a suitable Management Information System for
reporting to the Trustees. The report shall contain specific comments on
all issues related to the operation of the Mutual Fund as undertaken by
the AMC including those provided in the Format No. 3G for reporting by
AMC to Trustees.
6.27.4. The HYTR157 shall cover all issues mentioned in the Format No. 3C as
well as any other issue relevant to the operation of the Mutual Fund. The
Trustees may mention in their report, if they so desire, that they have
relied on the reports obtained from the independent auditor or internal/
statutory auditors or the Compliance Officer as the case may be. The
report shall mention that the Trustees have satisfied themselves about
the adequacy of compliance systems in the Mutual Fund.
6.27.5. AMC(s) and the Trustees shall update the reporting formats including
relevant provisions of amendments made to the MF
Regulations/circulars/guidelines issued by the Board and shall
specifically comment on their compliance.
6.27.6. To comply with the requirement of Regulation 22(7)(b)(iii), the AMC shall
file with trustees the details of securities transactions by key personnel
of the AMC, whether made in their own name or in the name of the AMC,
on a quarterly basis158.
6.28. Filing of Annual Information Return by Mutual Funds159
6.28.1. Mutual funds are required to submit the Annual Information Return (AIR)
under section 285 BA of the Income Tax Act, 1961, and various
guidelines notified by Central Board of Direct Taxes (CBDT). As per this
requirement, Trustees of Mutual Funds or such other person managing
the affairs of the Mutual Funds (as may be duly authorized by the
trustees in this behalf) have to report specified financial transactions
through electronic medium to Income Tax Department giving PAN of the
transacting parties in the AIR.
156 SEBI Circular No. MFD/CIR/09/014/2000 dated January 5, 2000
157 Regulation 12(4)(f)(i) of SEBI (Mutual Funds) Regulations, 2026
158 SEBI Circular No- IIMARP/MF/CIR/01/294/98 dated February 4, 1998, SEBI Circular No- SEBI/HO/IMD/IMD-1
DOF2/P/CIR/2021/550 dated April 12, 2021
159 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021
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6.29. Reporting of offsite inspection data
6.29.1. As part of the off-site inspection and surveillance of Mutual Funds and
to monitor the compliance of the MF Regulations and circulars issued
therein, the Board has framed the data structures. Accordingly, all
MF/AMCs along with RTAs associated with them shall furnish the data,
as per formats under Format No. 10, to the Board.
6.29.2. Mutual Funds shall submit the daily data in monthly file as per the
aforesaid formats on quarterly basis within 15 calendar days160 from end
of each calendar quarter. RTAs shall submit the said data on an
ongoing basis.
6.29.3. Details of the requirements prescribed under various Paragraphs of this
Master Circular which are covered through the reporting formats, as
mentioned in the Paragraph 6.29.1 above, are specified under Section
D of Format No. 10.
6.29.4. Any change in the prescribed formats shall be communicated by the
Board from time to time.
160 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/38 dated March 28, 2025
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CHAPTER 7: GOVERNANCE NORMS
PART I – FUND GOVERNANCE
7.1. Formation of Audit and Valuation Committees by the Trustees and/or
AMC161
7.1.1. Audit Committee of Trustees
Trustees shall constitute an audit committee, comprising of the Trustees
and chaired by an Independent Trustee to review the internal audit
systems and recommendations of the internal and statutory audit
reports and ensure that the rectifications as suggested by internal and
external auditors are acted upon.
7.1.2. Audit Committee of AMCs162:
AMCs of mutual funds shall be required to constitute an Audit
Committee. The role, responsibility, membership and other features of
the Audit Committee of AMC are –
(a) Role: The Audit Committee of the AMC shall be responsible for
oversight of financial reporting process, audit process, company’s
system of internal controls, compliance with laws and regulations
and other related process, with specific reference to operation of
its Mutual Fund business. In this regard, the Audit Committee shall,
inter-alia, have the following mandates:
(i) To review the financial reporting processes, the system of
internal controls and the audit processes for the Mutual Fund
operations of the AMC;
(ii) To ensure that the rectifications, if any, suggested by internal
and external auditors, etc. are acted upon.
(b) Membership:
(i) The Audit Committee of AMC shall have minimum three
directors as members, who shall be appointed by the Board
of AMC
(ii) At least two-third members of the Audit Committee shall be
independent directors of AMC. If two-third of the total strength
results into fraction, then higher number after rounding up
shall be considered.
161 SEBI Circular No. MFD/CIR No.010/024/2000 dated January 17, 2000.
162 SEBI Circular No. SEBI/HO/IMD/IMD-I DOF2/P/CIR/2022/17 dated February 09, 2022 which is applicable from August 1,
2022.
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(iii) All members of Audit Committee shall be persons with ability
to read and understand the financial statement and at least
one member shall have experience and background in
finance and accounts.
(iv) The Chairperson of the Committee shall be an independent
director, with adequate experience in the areas of finance
and financial services.
(c) Meetings:
(i) The Chairperson of the Audit Committee shall call the
meeting as and when required. However, at least four
meetings shall be called in a financial year and not more than
one hundred and twenty days shall elapse between two
meetings.
(ii) The quorum for meeting shall either be two members or one
third of the members of the Audit Committee, whichever is
greater, with at least two independent directors. If one-third
of the total strength results into fraction, then higher number
after rounding up shall be considered for the quorum.
(d) Reporting:
(i) The internal auditor shall submit its report to the Audit
Committee of AMC and the Board of AMC;
(ii) The Audit Committee of AMC shall forward their observations
on internal audit report, if any, to the Trustees.
(e) Powers and Responsibility:
(i) Financial Reporting
(I) Oversight of the Mutual Fund Schemes’ and AMC’s
financial reporting process.
(II) Considering and recommending for approval of AMC
Board, all accounting policy issues for the Schemes and
the AMC, including any proposed changes to the
accounting policies and practices for transactions with
related parties, etc.
(III) Review of audit opinion issued by the statutory auditors.
(IV) Considering and recommending to the AMC Board,
adoption of financial statements including half yearly
unaudited financial results prepared for the Scheme
and the financial statements of the AMC.
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(V) Any other relevant matters.
(ii) Audit (Internal and Statutory) and Internal Controls
(I) Considering and recommending for approval, the
appointment, re-appointment and, if required, the
replacement or removal of the Statutory Auditor of the
Mutual Fund, Internal Auditor of the Mutual Fund, etc.
and the fixation of fees for audit and any other services
rendered by the Statutory Auditors with respect to the
Mutual Fund.
(II) Reviewing the scope of Internal Auditors and
recommending for approval of the Board of AMC.
(III) Reviewing the Internal Audit Reports of the Schemes of
Mutual Fund (Including Internal Audit Report of critical
activities outsourced by the AMC such as Custodian,
Fund Accounting, the Registrar and Transfer Agent
activity, etc.).
(IV) Discussions with internal and statutory auditors on any
significant findings and follow up there on.
(V) Reviewing the findings of any internal investigations by
the AMC / internal auditors into matters where there are
suspected fraud or irregularity or material failure of
internal control systems or issues highlighted or
referred through whistle blower complaints, etc.
(VI) Reviewing Regulatory Inspection Reports.
(VII) Reviewing implementation status of all outstanding
action points arising out of Internal Audit Reports,
Statutory Audit Reports, Systems Audit Reports,
Inspection Reports etc.
(VIII) Reviewing the adequacy of the internal control systems,
including defining metrics for measuring internal
controls, seeking comments of the internal auditors
about Internal Control Systems, etc. and the steps
taken towards improving the effectiveness of internal
control system including through automation.
(IX) Interacting with the statutory and internal auditors of the
Mutual Fund, at least once annually without
engagement of management of the AMC. Besides the
mandatory requirement specified, such interactions
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may be held whenever felt necessary by the
independent directors of the Audit Committee.
(X) The Audit Committee of the AMC shall interact with the
Audit Committee of the Trustees at least once annually.
(iii) Regulatory Compliance and other Functions
(I) Evaluating various internal control measures in terms of
applicable MF Regulations and various circulars issued
thereunder.
(II) Reviewing periodic report on compliance with
applicable laws and regulations, including the details of
non-compliance along with the corrective actions, as
applicable.
(III) Reviewing the Annual Compliance Report in relation to
the “Policy on Prohibition of Insider Trading” of the
AMC.
(IV) Assess that the AMC has been managing the mutual
fund schemes independently of other activities and
have taken adequate steps to ensure that the interest
of investors of one scheme are not being compromised
with those of any other scheme or of other activities of
the AMC.
(iv) In addition to the above responsibilities, AMC Board from
time to time may also assign such other responsibilities to the
Audit Committee, as deemed fit.
(f) The Audit Committee of AMC shall comply with these guidelines in
addition to the requirements of The Companies Act, 2013 and
SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, as applicable.
7.1.3. Valuation Committee of AMC
The AMC shall constitute an in-house valuation committee consisting of
senior executives including personnel from accounts, fund management
and compliance departments. This committee shall, on a regular basis
review the systems and practices of valuation of securities.
7.2. Review and Reporting of Transactions163
7.2.1. Reporting of transactions
163 SEBI Circular No. MFD/CIR/09/014/2000 dated January 5, 2000, SEBI Circular No. MFD/CIR No.010/024/2000 dated
January 17, 2000, SEBI Circular No. SEBI/MFD/CIR/10/039/2001 dated February 9, 2001.
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(a) Transaction(s) by directors of the AMC: Directors of the AMC shall
file with the trustees on a quarterly basis details of transactions in
securities exceeding INR 1 lakh164.
(b) Transaction(s) by Trustee(s) Directors: Trustees shall report to
Mutual Funds transactions in securities that exceed165 INR 5 lakh
in value166, within one month from the end of respective calendar
quarters.
7.2.2. Review of transactions with associates
(a) Trustees shall review all transactions of the Mutual Fund with the
associates on a regular basis and ensure that Regulations167 are
complied with.
7.3. Independent Director on the Board of the AMC and Independent
Trustees168 169
7.3.1. Tenure:
(a) An independent trustee and independent director shall hold office
for a maximum of 2 terms with each term not exceeding a period
of 5 consecutive years.
(b) However, independent trustee or independent director who have
held office for two consecutive terms, shall be eligible for re-
appointment after a cooling-off period of 3 years. During the
cooling-off period, such individuals shall not be associated with the
concerned MF, AMC & its subsidiaries and / or sponsor of AMC.
7.3.2. For the purpose of appointment of independent director(s) on the Board
of AMC/Trustee Company, an ‘associate’ shall have following meaning:
(a) Relatives170 of Sponsor(s) or directors of the Sponsor Company or
relatives of Associate Directors of the AMC(s) and Trustee.
(b) Persons providing any type of professional service to the Mutual
Funds, the AMC and the Trustees and the Sponsor(s). Also,
persons having a material pecuniary relationship with the above
mentioned entities that may, in the judgment of the Trustees, affect
their independence.
164 SEBI Circular No. SEBI/MFD/CIR/10/039/2001 dated February 9, 2001.
165 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021.
166 SEBI Circular No. MFD/CIR/09/014/2000 dated January 5, 2000.
167 Regulations 12(2)(b) of SEBI (Mutual Funds), Regulations, 2026
168 SEBI Circular No. MFD/CIR/11/354/2001 dated December 20, 2001, SEBI Circular No. MFD/CIR/13/16799/2002 dated
August 29, MFD/CIR/17/21105/2002 dated October 28, 2002.
169 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2017/125 dated November 30, 2017.
170 As defined under Section 2(77) of the Companies Act 2013
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(c) Nominees of the companies who are stakeholders in the Sponsor
company or AMC(s) (even if they are not deemed sponsors by
virtue of holding less than 40% of net worth of AMC(s)).
7.3.3. Cooling off Period: An “associate”171 as defined above cannot be
appointed as Independent Director even after he/she ceases to be an
“associate” unless a cooling off period of three years has elapsed from
the date of his disassociation. Illustration- Suppose an employee of the
sponsor or their associate companies or AMC or trustee company
resigns on December 1, 2025, then he cannot be appointed as an
independent director till December 1, 2028. During this intervening
period, he can be appointed only as associate director. However, once
he is appointed as an associate director, say on December 2, 2025, he
cannot be considered as "independent" from December 2, 2028. There
must be a cooling off period of 3 years from the date he ceases to be an
associate director.
7.3.4. In case the composition of the directors does not meet the requirements
stipulated in Regulation 11(5) and Regulation 16(2)(c), Mutual Funds
shall inform the Board along with the steps proposed to ensure
compliance.
7.3.5. AMC(s)/Trustees shall appoint Independent Directors in place of the
resigning director(s) within a period of 3 months from the date of
resignation. Where Mutual Funds are unable to meet this time limit, they
shall report to the Board explaining the reasons for non-compliance.
Mutual Funds may maintain a panel of eligible persons who can be
appointed as Independent Directors as and when required. They may
also consider appointing more than the required minimum number of
Independent Directors to enhance the standards of corporate
governance and also to meet the regulatory requirements in case of
resignation of an independent director.
7.3.6. In terms of applicable MF Regulations, for appointments of directors of
AMC/Trustee Company, MF/AMCs shall submit bio-data of such
directors to the Board as per the Format No. 1E.
7.4. Statutory Auditors of Mutual Funds172:
7.4.1. The auditor of a mutual fund, appointed in terms of Regulation 69(1)
shall be a firm, including a limited liability partnership, constituted under
the LLP Act, 2008173.
7.4.2. Period of appointment:
171 Regulation 2(d) of the SEBI (Mutual Funds) Regulations, 2026
172 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2017/125 dated November 30, 2017.
173 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021
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(a) No MF shall appoint an auditor for more than 2 terms of maximum
five consecutive years. Such auditor may be re-appointed after
cooling off period of 5 years.
(b) Further, during the cooling-off period of five years, the incoming
auditor may not include:
(i) Any firm that has common partner(s) with the outgoing audit
firm
(ii) Any associate174 firm(s) of the outgoing audit firm which are
under the same network of audit firms wherein the term
“same network” includes the firms operating or functioning,
hitherto or in future, under the same brand name, trade name
or common control.
7.5. Internal Auditors of Mutual Funds
7.5.1. The Internal auditors of Mutual funds shall be appointed in terms of SEBI
letter no. SEBI/HO/IMD/IMD-SEC-4/P/OW/2024/32093/1 dated October
10, 2024 and other clarifications/ guidelines/ letters issued in this
regards as amended from time to time.
7.6. Investment and/or Trading in Securities by the employees of the AMC(s)
and Trustee(s)175
7.6.1. The guidelines enumerated below specify the minimum requirements
that have to be followed. The AMC(s) and Trustees are free to set more
stringent norms for investment and/or trading in securities by their
employees. The Board of the AMC and Trustees shall ensure
compliance with these Guidelines on a continuous basis and shall report
any violations and remedial action taken by them in the periodical
reports submitted to the Board176. This Paragraph shall not be
applicable for investments and redemption of mutual fund units. For
mutual funds units, Securities and Exchange Board of India (Prohibition
of Insider Trading) Regulations, 2015, as amended from time to time,
shall be followed strictly by the Trustees, Asset Management
Companies and their employees and directors177.
7.6.2. Guidelines for Investment and/or Trading in Securities by
Employees of AMC(s) and Trustees:
174 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021
175 SEBI Circular No. SEBI/HO/IMD/IMD-I DOF5/P/CIR/2021/654 dated October 28, 2021 modified provisions of SEBI Circular
No. MFD/CIR No.4/216/2001 dated May 8, 2001, SEBI Cir MFD/CIR/05/432/2002 June 20, 2002, SEBI Circular No.
SEBI/IMD/CIR No.7/13391/03 dated July 11, 2003, SEBI Circular No. SEBI / IMD / CIR No 14 / 187175/ 2009 dated December
15,2009, SEBI/IMD/DF/10/2014 dated May 22, 2014, SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2016/124 dated November
17, 2016 and SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021. SEBI Circular No.
SEBI/HO/IMD/IMD-I/DOF5/P/CIR/2021/654 dated October 28, 2021
176 Regulation 12(4)(c) of SEBI (Mutual Funds) Regulations, 2026
177 SEBI Circular SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/144 dated October 22, 2024
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(a) Applicability
(i) These Guidelines shall be applicable to all employees of
AMC(s) and Trustees and shall form a part of the Code of
Conduct for employees adopted by the AMC(s) and/or
Trustees. New employees shall be bound by these
Guidelines from the date of joining the AMC(s) and/or
Trustees.
(ii) These Guidelines shall cover the sale or purchase of
securities made:
(I) In the name of employees, either individually or jointly,
(II) In the name of the employees’ spouse,
(III) As a member of HUF,
(IV) In the name of parent, sibling or child of the employee
or of the spouse of such employee, any of whom is
either dependent financially on such employee or
spouse of employee, or consults such employee or
spouse of employee in taking decisions relating to
trading in securities.
(b) The objectives and principles of these Guidelines are:
(i) To ensure that all transactions in securities made by
employees in their personal capacity are conducted in
consonance with these Guidelines and in such manner as to
avoid any actual or potential conflict of interest or any abuse
of an individual’s position of trust and responsibility.
(ii) To ensure that the employees of AMC(s), Board members of
AMC(s) and Board members of Trustees, including Access
Persons shall not take undue advantage of any sensitive
information that they may have about any company or its
securities or about the AMC’s schemes or its units.
(iii) Explanation: Access Person for the purpose of these
Guidelines shall mean the Head of the AMC (designated as
CEO/Managing Director/President or by any other name),
Executive Directors, Chief Investment Officer, Chief Risk
Officer, Chief Operation Officer, Chief Information Security
Officer, Fund Managers, Dealers, Research Analysts, all
employees in the Fund Operations Department, Compliance
Officer and Heads of all divisions and/or departments, or any
other employee as decided by the AMC(s) and/or Trustees.
Non-Executive Directors of the AMC/trustee company or
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trustees who are in possession of / have access to any non-
public information which could materially impact the price of
the securities, NAV of the schemes or interest of the
unitholders shall also be deemed as Access Persons. The
trustee resource person appointed under Paragraph 7.12.1
shall also be treated as access person.
(iv) To guide employees of AMC(s) and Trustees in maintaining
a high standard of probity that one would expect from an
employee in a position of responsibility.
7.6.3. General
(a) Investments Covered:
(i) These Guidelines cover the purchase or sale of securities
such as shares, debentures, bonds, warrants, derivatives178.
(ii) These Guidelines do not apply to the following investments
by the employees:
(I) Investments in fixed deposits with banks/financial
institutions/companies, life insurance policies, provident
funds (including public provident fund) or Investment
in savings schemes such as National Savings
Certificates, National Savings Schemes, Kisan Vikas
Patra, or any other similar investment.
(II) Investments of a non-financial nature such as gold etc.,
where there is no likely conflict between the Mutual
Fund’s interest and the employees’ interest.
(III) Investments in government securities, overnight
schemes and schemes floated by other Mutual Funds.
(IV) Investments in units of schemes floated by mutual funds
/AMCs where the concerned persons (in terms of the
applicability stated at Paragraph 7.6.2(a)(i) above are
employed179.
(b) No employee shall pass on information to anybody inducing
him/her to buy/sell securities which are being bought and/or sold
by the Mutual Fund of which the AMC is the investment manager.
(c) Prior approval of personal investment transactions:
178 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/144 dated October 22, 2024
179 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/144 dated October 22, 2024
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(i) All access persons except Compliance Officer shall apply in
the form prescribed by the AMC(s) and/or Trustees to the
Compliance Officer for prior approval of transactions for sale
or purchase of securities other than those expressly stated to
be exempt under these guidelines. The Compliance Officer
shall apply to the Head of the AMC(s). The decision of the
Compliance Officer shall be final and binding on the
employee.
(ii) In these Guidelines, in the case of the Compliance Officer’s
own transactions for purchase or sale of securities or
disclosure or any other related matter, the term "Compliance
Officer" wherever it appears, shall be read as "Head of the
AMC."
(iii) The Compliance Officer may coordinate with the Fund
Management Department of the Mutual Fund, wherever
necessary, to clear requests of investment and/or trading in
securities by the employees.
(iv) The approval of Compliance Officer for carrying out a
transaction of sale or purchase of a security by the access
person shall not be valid for more than 7 trading days from
the date of approval.
(v) If a transaction approved by Compliance Officer has not been
effected within 7 trading days from the date of its approval,
the access person shall be required to obtain approval once
again from Compliance Officer prior to effecting the
transaction.
(vi) All employees shall refrain from profiting from the purchase
and sale or sale and purchase of any security within a period
of 30 calendar days from the date of their personal
transaction. However, in cases where it is done, the
employee shall provide a suitable explanation to the
Compliance Officer, which shall be reported to the Board of
the AMC and the Trustees at the time of review180.
7.6.4. Investments in Shares/Debentures/Bonds/ Warrants/ Derivatives
(a) Investments in securities shall broadly be classified into
investments through
(i) primary markets; and
180 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/144 dated October 22, 2024
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(ii) secondary markets.
(iii) An employee including access person is permitted to apply
to a public issue of shares / debentures /bonds /warrants of
any company, as long as the application is made in the
normal course of the public issue. Such an application may
be made without seeking the clearance from the Compliance
Officer. Employees of AMC(s) and Trustees are prohibited
from applying in any reserved quota such as promoters’
quota, employees’ quota etc. Employees may participate in
private placement of equity by any company subject to there
being no conflict with the interest of investors of the mutual
fund and disclosure of such investments to the Compliance
Officer immediately.
(b) Investments through the primary markets:
(i) Notwithstanding anything stated in Paragraph 7.6.4(a)(iii)
above, an employee of an AMC(s) and/or Trustees may apply
for shares / debentures /bonds /warrants in a preferential
offer, in cases where such a preferential offer is being made
by a company that belongs to the same industrial group as
the company in which the employee already has an
investment, provided that such a preferential offer is made to
all shareholders and/or debenture holders of such
companies. Details of such applications made shall be
intimated to the Compliance Officer.
(ii) The employees of the AMC(s) and/or Trustees including
access person may apply for any rights offer of any company
in which they are already shareholders. Applications for
additional rights (over and above the normal rights
entitlement) shares may be made by the employees including
access person without getting the clearance from the
Compliance Officer. An employee including access person
may also sell and/or renounce his rights entitlement without
getting the clearance from the Compliance Officer. However,
if an access person wishes to purchase the “Rights
renunciations” he shall get the clearance of the Compliance
Officer for the same. Such purchases shall be done only at
market prices. Details of any applications made in any rights
issue, whether in the normal course, or through purchase of
rights renunciations, shall be intimated to the Compliance
Officer.
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(iii) The employees of AMC and Trustees may avail discretionary
Portfolio Management Services (PMS) subject to compliance
with all applicable SEBI Regulations and circulars. AMCs and
Trustees shall adhere to the guidelines issued by AMFI in this
regard.
(c) Investments through the secondary markets:
(i) An access person who wishes to make a secondary market
transaction shall submit a written application to that effect to
the Compliance Officer specifying the name of the company
whose securities the employee wishes to buy and/or sell,
type of security, and the number of shares / debentures
/bonds /warrants/ derivatives that the access person wishes
to buy/sell.
(ii) The Compliance Officer shall clear these requests if the
following conditions are met:
(I) If the shares / debentures /bonds /warrants of the
company or derivatives specified by the access person
are not held by any scheme of the Mutual Fund of which
the AMC is the investment manager;
(II) If the shares / debentures /bonds /warrants of the
company or derivatives specified by the employee are
held by any Scheme of the Mutual Fund of which the
AMC is the investment manager, there should be a
"cooling off" period of 15 calendar days. The
Compliance Officer shall ensure that the last transaction
in that particular security was done by the Mutual Fund
at least 15 calendar days prior to the date of the written
application by the access person. In other words, an
application for a purchase /sale transaction on a
personal basis would be cleared only if the Mutual Fund
has not transacted in that particular security for at least
15 calendar days.
(III) However, trades executed pursuant to a trading plan
submitted by the employees in terms of SEBI (PIT)
Regulations, 2015, shall be exempt from the
requirement of a “cooling off” period, provided that such
trading plan:
(A) is in compliance with the norms prescribed in SEBI
(PIT) Regulations, 2015.
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(B) is publicly disclosed on the website of the
concerned Mutual Fund
(IV) The Compliance Officer shall also properly monitor
trades of the MF scheme and that of the access person,
as per the trading plan, in order to ensure that such
trading plan does not entail trading in securities for
market abuse.
(V) Provisions of the “cooling off” period may be relaxed by
Compliance Officer for maximum 2 times in a financial
year per Access Person, for sale of securities, held by
the Access Person for a period of one year or more,
subject to the following:
(A) Access Person may apply anytime during the
financial year for such relaxation to the
Compliance Officer. Compliance Officer shall
decide on the said application within 5 calendar
days of receipt of such application.
(B) Access Person may sell the securities within 10
trading days from the date of clearance by the
Compliance Officer.
(C) Roll over of unexecuted portion, if any, shall not be
allowed. However, a second request can be made
within the financial year as stated above.
(D) The Access Person shall ensure that from the time
of making an application under Paragraph (A)
above till the conclusion of the sale of the
concerned securities, he/she is not in possession
of / does not have access to any non-public
information which could materially impact the price
of the concerned securities. Compliance Officer
shall not grant clearance for such transaction,
where the AMC is in possession of / has access to
any non-public information which could materially
impact the price of the concerned securities.
(E) The Compliance Officer shall carry out all other
regulatory checks and obtain necessary
undertakings from the Access Person.
(VI) In case of pre-existing pledges / encumbered
arrangements (i.e., securities pledged prior to becoming
an Access Person), the provisions of “cooling off” period
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shall not be applicable in the event of sale of securities
by lenders due to shortfall of margin, subject to the
following:
(A) Access person shall, on the date of applicability of
these provisions or on the date of joining the AMC
or on the date of being designated as such,
declare to the Compliance Officer
(1) details of all the pre-existing pledges /
encumbered arrangements in which the
securities held by him/her are pledged or
encumbered and
(2) details of ESOPs bought with borrowed funds,
along with the agreement with such lender.
(B) Any instances of sale of securities by lender shall
be promptly intimated to the Compliance Officer.
The Access Person shall ensure the following and
submit a self-declaration to the following effect
that:
(1) the Access Person has not engaged directly or
indirectly in front-running, self-dealing, trading
while in possession of non-public information
which could materially impact the price of the
concerned securities or any other prohibited
activities.
(2) the sale by the lender was due to shortfall of
margin as per the terms of agreement with the
lender and he had not entered into any other
arrangement with the lender in this regard.
(C) Access Person shall also submit the margin notice
received for the said shortfall of margin to the
compliance officer.
(iii) The Compliance Officer shall keep a track of the transactions
of the employees and transactions of the Mutual Fund to
ensure that there is no conflict of interest between them i.e.
the Compliance Officer should track whether the Mutual Fund
has transacted in the same securities either before or after
the employee’s transaction(s).
(iv) The Compliance Officer shall maintain a record of all
requests for pre clearance regarding the purchase or sale of
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a security, including the date of the request, the name of the
access person, the details of the proposed transaction and
whether the request was approved or denied and waivers
given, if any, and its reasons.
(v) No employee shall purchase any security (including
derivatives) on a “Carry Forward” basis or indulge in “Short
Sale” of any security (including derivatives) i.e. employees
who effect any purchase transaction(s) shall ensure that they
take delivery of the securities purchased, before selling them.
(vi) Any transaction of Front Running by any employee directly or
indirectly is strictly prohibited. For this purpose, “Front
Running” means any transaction of purchase and/or sale of
a security carried by any employee whether for self or for any
other person, knowing fully well that the AMC also intends to
purchase and/or sell the same security for its Mutual Fund
operations. To ascertain that the employee had no prior
knowledge of the Mutual Fund's intended transactions, the
Compliance Officer may take a declaration in this regard from
the employee. Such declaration may be included in the
application form itself.
(vii) Any transaction of self-dealing by any employee either
directly or indirectly, whether alone or in concert with another
person is prohibited. For this purpose, “Self-Dealing” means
trading in the securities based on price sensitive information
to which the employee has access by virtue of his office.
Declaration to this effect may be taken from the employee
while clearing the proposals for investment.
(viii) The employees shall not insist or suggest to the concerned
brokers to charge reduced brokerage, or accept any contract
with a clause on reduced brokerage charge.
7.6.5. Periodic Disclosures:
(a) All access persons shall submit, in the form prescribed by the
Mutual Fund of which the AMC is the investment manager, details
of their personal transactions of purchase or sale of securities to
the Compliance Officer. The details to be submitted are as follows:
(i) Details of transactions effected for purchase and/or sale of
securities including transactions in rights entitlements
through the secondary market within 7 calendar days from
the date of transaction;
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(ii) Details of allotment received against application for public
and rights issues within 7 calendar days from the date of
receipt of the allotment advice;
(iii) A statement of holding in securities as on March 31 within 30
calendar days from the end of every financial year ending
March 31.
(b) All employees other than access persons shall submit, in the form
prescribed by the Mutual Fund, to the Compliance Officer:
(i) Details of each of their transactions for purchase or sale of
securities including allotment in public and rights issues
within 7 calendar days.
(ii) A statement of holding in securities as on March 31 within 30
calendar days from the end of every financial year ending
March 31.
(iii) A declaration shall also be included in the reporting form on
the lines of Paragraph 7.6.4(c)(vi) and 7.6.4(c)(vii) regarding
Front Running and Self-Dealing.
7.6.6. Review by the Board of Directors of AMC and the Trustee(s)
The Board of the AMC and the Trustees shall review the compliance of
these Guidelines in their periodic meetings. They shall review the
existing procedures and recommend changes in procedures based on
the AMCs experience, industry practices and/or developments in
applicable laws and regulations. They shall report compliance and any
violations and remedial action taken by them in their reports submitted
to the Board.
7.6.7. Applicability of Insider Trading Regulations
Securities and Exchange Board of India (Prohibition of Insider Trading)
Regulations, 2015 shall be followed strictly by the Trustees, Asset
Management Companies and their employees and directors.
7.7. Responsibilities of AMC & Trustees181
7.7.1. For effective discharge of their responsibilities under the MF
Regulations, the AMC(s) shall provide infrastructure and administrative
support to the Trustees. The Trustees of Mutual Funds may decide to
appoint independent auditors and/or may have separate full-fledged
administrative set up. However, the expenditure incurred in this regard
shall be within the limits as specified in Regulation 66(7). AMC(s) shall
181 MFD/CIR/09/014/2000 dated January 5, 2000
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place the correspondence and reports submitted to the Board before the
Trustees.
7.8. Core responsibilities of the Trustees182
7.8.1. In terms of the said Regulation 12(6), the Trustees shall exercise
independent due diligence on certain “core responsibilities”, which are
specified as under:
(a) The Trustees shall ensure the fairness of the fees and expenses
charged by the AMCs.
(b) The Trustees shall review the performance of AMC in its schemes
vis-a-vis performance of peers or the appropriate benchmarks.
(c) The Trustees shall ensure that the AMCs have put in place
adequate systems to prevent mis-selling to increase assets under
their management and valuation of the AMCs.
(d) The Trustees shall ensure that operations of AMCs are not unduly
influenced by the AMCs Sponsor, its associates and other
stakeholders of AMCs.
(e) The Trustees shall ensure that undue or unfair advantage is not
given by AMCs to any of their associates/group entities.
(f) The Trustees shall be responsible to address conflicts of interest,
if any, between the shareholders/stakeholders/associates of the
AMCs and unitholders.
(g) The Trustees shall ensure that the AMC has put in place adequate
systems to prevent misconduct including market abuse/misuse of
information by the employees, AMC and connected entities of the
AMCs.
7.8.2. The Trustees shall take steps to ensure that there are system level
checks in place at AMCs’ end to prevent fraudulent transactions
including front running by employees, form splitting/ mis-selling by
distributors etc. The Trustees shall review such checks periodically.
7.8.3. The Trustees and their resource persons shall independently evaluate
the extent of compliance by AMCs vis-à-vis the identified key areas and
not merely rely on AMCs’ submissions /external assurances.
7.8.4. The Trustees shall ensure that suitable mechanisms/systems are put in
place by the AMCs to generate system based information/data/reports
for evaluation and effective due diligence by the Trustees. The Trustees
shall also ensure that the AMCs periodically review such systems.
182 Inserted by SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2023/117 dated July 07, 2023
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7.8.5. AMCs shall submit exception reports/analytical information to the
Trustees, that add value to the process of exercising their oversight role.
AMCs shall also provide alerts based automated reports to the Trustees
as may be required by the Trustees. The Trustees shall evaluate the
nature and adequacy of the alerts and the manner of dealing with such
alerts by AMCs.
7.8.6. The Trustees shall require the AMCs to furnish, in a true and fair
manner, reports and alerts based on pre-decided parameters including
but not limited to the areas specified as core responsibilities at
Paragraph 7.8.1 above, for taking appropriate action.
7.8.7. The Trustees shall periodically review the steps taken by AMCs for folios
which do not contain all the Know Your Client (KYC) attributes / updated
KYC attributes and ensure that the AMCs take remedial steps
necessary for updating the KYC attributes especially pertaining to bank
details, PAN, mobile phone number.
7.9. Third Party Assurances183
7.9.1. For responsibilities other than the core responsibilities mentioned at
Paragraph 7.8, the Trustees may rely on professional firms such as
Audit Firms, Legal Firms, Merchant Bankers, etc. (collectively referred
to as “third party fiduciaries”) for carrying out due diligence on behalf of
the Trustees.
7.9.2. The responsibilities other than core responsibilities, for which the
Trustees may avail services of third party fiduciaries, include the
following:
(a) Overseeing that AMCs manage the operations of Mutual Fund
schemes independently from other activities.
(b) Discharging their role as a custodian of assets on behalf of
unitholders in accordance with MF Regulations and the trust deed.
(c) Reviewing the net worth of the AMC on a periodic basis to ensure
compliance with prescribed threshold.
(d) Ensuring that the transactions of the Mutual Funds are in
accordance with the provisions of the trust deed.
7.10. Unit Holder Protection Committee (UHPC)184
7.10.1. The UHPC, constituted by AMC under Regulation 22(8)(d)(i), shall be
responsible for:
183 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2023/117 dated July 07, 2023
184 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2023/117 dated July 07, 2023
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(a) protection of interest of unit holders of Mutual Fund schemes in
relation to all products and services offered by the AMC.
(b) ensuring adoption of sound and healthy market practices in terms
of investments, sales, marketing, advertisement, management of
conflict of interests, redressal of unit holder’s grievances, investor
awareness.
(c) compliance with laws and regulations and other related processes
with specific reference to operation of the Mutual Fund business.
7.10.2. The UHPC shall, inter-alia, have the following mandates:
(a) To review the various compliance issues relating to protection of
the interests of the unit holders.
(b) To keep the unit holders well informed of and educated about
mutual fund products, investor charter and complaint handling
procedures.
7.10.3. The UHPC shall report its findings to the board of directors of AMC along
with recommendations for action.
7.10.4. The UHPC shall make recommendations relating to protection of
interest of investors as well as monitor its implementation.
7.10.5. The detailed guidelines regarding UHPC are specified at Annexure 6 to
this master circular. AMC shall ensure that UHPC is constituted and
operates in compliance with the said guidelines.
7.10.6. In addition to the above functions and responsibilities, the board of
directors of AMCs, from time to time may also assign such other
responsibilities to the UHPC, as deemed fit.
7.11. Meetings between the Trustee Company and the AMC185
In terms of Regulation 23, the board of directors of the AMCs and the
board of directors of the Trustee Company shall meet at least once a
year to discuss the issues concerning the Mutual Fund, if any, and future
course of action, wherever required.
7.12. Resources for Trustees of Mutual Funds186:
7.12.1. Trustees shall appoint a dedicated officer as employee of Trustees and
reporting directly to Trustees, having professional qualification and
minimum 5 years of experience in finance and financial services related
field. The scope of the work of the said officer shall be specified by the
185 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2023/117 dated July 07, 2023
186 SEBI Cir. No. SEBI/HO/IMD/DF4/CIR/P/2020/151 dated August 10, 2020, SEBI Circular no.
SEBI/HO/IMD/DF4/CIR/P/2020/178 dated September 23, 2020.
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Trustee from time to time to support the role and responsibilities of the
Trustees. The officer shall accordingly assist the Trustees and
discharge the activities assigned to him.
7.12.2. Further, Trustees shall have standing arrangements with independent
firms for special purpose audit and/or to seek legal advice in case of any
requirement as identified and whenever considered necessary.
7.12.3. The expenditure incurred for the above shall be charged under “fees
and expenses of trustees” under Regulation 66(5)(d).
7.12.4. Notwithstanding the above, the Trustees shall however continue to be
liable for discharge of various fiduciary responsibilities as cast upon
them in the MF Regulations.
7.13. 187188Alignment of interest of Asset Management Companies (AMCs) with
the Unitholders of the Mutual Fund Schemes
7.13.1. In terms of Regulation 22(3)(a), AMCs shall invest minimum amount as
a percentage of AUM in their scheme(s), based on the risk value
assigned to the scheme(s) in terms of Paragraph 6.16 of this Master
Circular, in the manner provided below –
Risk Value Risk Level as Per Minimum percentage
Risk-O-Meter of AUM to be invested
in scheme
≤ 1 Low 0.03
> 1 to ≤ 2 Low to Moderate 0.05
> 2 to ≤ 3 Moderate 0.07
> 3 to ≤ 4 Moderately High 0.09
> 4 to ≤ 5 High 0.11
> 5 Very High 0.13
7.13.2. For the above purpose,
187 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2020/100 Dated June 12, 2020 – provisions stand rescinded in terms of SEBI
Circular SEBI/HO/IMD/IMD-IDOF5/P/CIR/2021/624 dated September 2, 2021, Refer SEBI letter No.
SEBI/HO/IMD/DF5/OW/P/2021/24745/1 dated September 20, 2021
188 SEBI Circular SEBI/HO/IMD/IMD-IDOF5/P/CIR/2021/624 dated September 2, 2021.
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(a) The risk value of the scheme as per the risk-o-meter of the
immediate preceding month shall be considered.
(b) The investment shall be maintained at all points of time till the
completion of tenure of the scheme or till the scheme is wound up.
(c) AMCs shall, except in case of close ended scheme(s), conduct a
quarterly review to ensure compliance with the requirement of
investment of minimum amount in the scheme(s) which may
change either due to change in value of the AUM or in the risk
value assigned to the scheme. Further, based on review of
quarterly average AUM, shortfall in value of the investment in
scheme(s), if any, shall be made good within 7 calendar days of
such review. AMC shall have the option to withdraw any excess
investment than what is required pursuant to such review.
(d) AMCs may invest from their net worth or the sponsor may fund the
AMC to fulfil the aforesaid obligations, if required. However, the
AMCs shall be required to make good the shortfall in the minimum
net worth to comply with the requirement of the MF Regulations in
case of sustenance of temporary Mark to Market loss for two
consecutive quarters. AMC shall ensure that the temporary nature
of the Mark to Market loss is certified by the statutory auditor.
7.13.3. AMCs shall not be required to invest in ETFs, Index Funds, Overnight
Funds, Funds of Funds scheme(s) and close ended funds where the
subscription period has closed as on 02 May 2022.
7.13.4. The mandatory contribution already made by the AMCs in compliance
with the applicable MF Regulations shall not be withdrawn. However,
such contribution can be adjusted against the investment required to be
made by the AMC as per Paragraph 7.13 of this Master Circular.
7.13.5. Compliance with Paragraph 7.13 of this Master Circular shall be
ensured by the AMCs and monitored by the Trustees. Any non-
compliance in this regard, shall be reported in the Quarterly CTR and
HYTR.
7.13.6. Details of investment by AMCs in each of their mutual fund scheme(s)
shall be disclosed on the website of AMCs and AMFI.
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7.14. 189Alignment of interest of 190Designated Employees of AMCs with the
Unitholders of the Mutual Fund Schemes:
7.14.1. Designated Employees of the AMCs shall include:
(a) Chief Executive Officer (CEO), Chief Investment Officer (CIO),
Chief Risk Officer (CRO), Chief Information Security Officer
(CISO), Chief Operation Officer (COO), Fund Manager(s),
Compliance Officer, Sales Head, Investor Relation Officer(s)
(IRO), heads of other departments, Dealer(s) of the AMC;
(b) Direct reportees to the CEO (excluding Personal
Assistant/Secretary);
(c) Fund Management Team and Research team;
(d) Other employees as identified & included by AMCs and Trustees
7.14.2. In terms of Regulation 22(3)(b), a minimum slab wise percentage of the
salary/ perks/ bonus/ non-cash compensation (gross annual CTC) net
of income tax and any statutory contributions (i.e. PF and NPS) of the
Designated Employees of the AMCs shall be mandatorily invested in
units of Mutual Fund schemes in which they have a role/oversight. The
manner for such investments shall be as under:
(a) The slabs based on gross annual CTC shall be as under:
Slabs based on Minimum Minimum
gross annual CTC percentage required percentage required
to be invested to be invested
(including Employee (excluding ESOPs)
Stock Ownership
Plan (ESOPs), if any)
Option Option A Option B
Slab 0 Nil Nil
(Gross CTC less
than or equal to
25 lakhs)
189 SEBI Circular No. SEBI/HO/IMD/IMD-I/DOF5/P/CIR/2021/553 Dated April 28, 2021, Refer SEBI Letter No.
SEBI/HO/IMD/DF5/OW/P/2021/24745/1 dated September 20, 2021, Refer SEBI letter No.
SEBI/HO/IMD/DF5/OW/P/2021/30715/1 dated October 29, 2021
190 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/36 dated March 21, 2025, SEBI Circular No. SEBI/HO/IMD/IMD-
I/DOF5/P/CIR/2021/629 Dated September 20, 2021 read with SEBI Circular No. SEBI/HO/IMD/IMD-I/DOF5/P/CIR/2021/582
dated June 25, 2021.
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Slab 1 10% of gross annual 12.5% of gross annual
CTC net of income tax CTC net of income
(Gross CTC above
and any statutory tax, any statutory
25 lakhs but less
contributions. contributions and
than or equal to 50
ESOPs.
lakhs)
Slab 2 14% of gross annual 17.5% of gross annual
CTC net of income tax CTC net of income
Gross CTC above
and any statutory tax, any statutory
50 lakhs but less
contributions. contributions and
than or equal to 1
ESOPs.
crore
Slab 3 (Gross CTC 18% gross annual 22.5% of gross annual
above 1 crore) CTC net of income tax CTC net of income
and any statutory tax, any statutory
contributions contributions and
ESOPs.
AMC shall have the option to adopt Option A or Option B for its
Designated Employees. Designated Employee with no ESOP
component as part of their CTC shall be covered under Option A.
(b) The slabs applicable to a Designated Employee at point (a) above
shall also be decided based on the role of the Designated
Employee in the AMC in the following manner191:
Category Employees Slab applicable
Category A  Chief Executive Officer Slab applicable
(CEO) based on the CTC of
the employee as per
 Chief Investment Officer
Paragraph 7.14.2.(a)
(CIO)
above.
 Fund Managers
 Investment Research
team
 Dealers
 Chief Risk Officer (CRO)
191 Refer SEBI Letter No. SEBI/HO/IMD/POD-1/OW/P/2025/20427/1 dated July 30, 2025
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 Compliance Officer
 Members of the
Investment Committee
Category B  Direct reportees to the Slab 0 or Slab 1,
CEO (excluding Personal irrespective of the
Assistant / Secretary and CTC, as decided by
Category A employees) AMC based on the
activity being
 Chief Information
performed by the
Security Officer (CISO)
employee. AMCs,
 Chief Operation Officer while deciding the
(COO) suitable slabs, shall
ensure that the
 Sales Head
employee who is
directly or indirectly
 Investor Relation
related to investment
Officer(s) (IRO)
function, is
 Heads of departments considered under
other than investment Slab 1.
and risk functions
7.14.3. For dedicated Designated Employees associated with liquid fund
schemes, Slab 1 at Paragraph 7.14.2(a) above shall be considered even
if the Designated Employee falls in either Slab 2 or Slab 3 based on the
CTC. For Designated Employees associated with other schemes in
addition to liquid fund scheme, Slabs based on the CTC of the employee
shall be applicable192.
7.14.4. For designated employees, who do not fall under either Category A or
Category B, slabs may be decided by the AMC based on the role of the
employee.
7.14.5. The contribution of the Designated Employees in close ended schemes
launched on or after October 1, 2021 shall be made in the units of any
open ended schemes having (a) risk value equivalent to or higher than
and (b) underlying portfolio of similar nature as, the mandated close
ended schemes.
7.14.6. Similarly, for interval schemes, schemes having restrictions on
individual investments or lump-sum investments or having temporary
suspensions on subscription or schemes having lock-in period of more
than 3 years, investments required under the relevant provisions of
192 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/36 dated March 21, 2025. Also, refer SEBI Letter No.
SEBI/HO/IMD/POD-1/OW/P/2025/20427/1 dated July 30, 2025
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Paragraph 7.14 above shall be made in the units of any open ended
schemes having (a) risk value equivalent to or higher than and (b)
underlying portfolio of similar nature as, the aforesaid schemes.
7.14.7. The compensation mandatorily invested in units, as mentioned above,
shall be:
(a) proportionate to the AUM of the schemes in which the Designated
Employee has a role/oversight. For this purpose, Exchange
Traded Funds (ETFs), Index Funds, Overnight Funds, Fund of
Funds schemes investing only in a single ETF and existing (i.e. as
on September 30, 2021) close ended schemes, shall be excluded.
(b) paid proportionately over 12 months on the date of payment of
such salary/ perks/ bonus/ non-cash compensation. In all cases
of deferred compensation including Employee Stock Options, the
AMC shall decide whether the required deduction of such deferred
compensation (perquisite value less taxes), should be on the date
of grant or exercise. However, the policy should be same for all
Designated Employees of the AMC, in a given financial year.
(c) locked-in for a minimum period of 3 years or tenure of the scheme
whichever is less.
(d) invested in ‘Growth option’ of the mutual fund schemes. For
schemes where growth option is not available, the investment shall
be made in the ‘Reinvestment of Income Distribution cum capital
withdrawal option’. For schemes where both the above options are
not available, investment shall be made in the ‘Payout of Income
Distribution cum capital withdrawal option’193.
7.14.8. Further, with a view to allow the Designated Employees to diversify their
unit holdings, in case of dedicated fund managers managing only a
single scheme / single category of schemes, 50% of the aforementioned
compensation shall be by way of units of the scheme/category managed
by the fund manager and the remaining 50% can, if they so desire, be
by way of units of those schemes whose (a) risk value as per the risk-o-
meter is equivalent or higher than and (b) whose underlying portfolio is
of similar nature as, the scheme managed by the fund manager. This is
also applicable to dedicated fund managers of overseas funds.
7.14.9. Provided that for Designated Employees managing liquid fund schemes,
up to 75 percent of the minimum investment amount required to be
invested in liquid fund schemes may be invested in schemes, managed
by the AMC, with higher risk as compared to liquid fund schemes. This
193 Refer SEBI Letter No. SEBI/HO/IMD/DF5/OW/P/2021/30715/1 dated October 29, 2021 and SEBI Letter No.
SEBI/HO/IMD/DF5/OW/P/2021/24745/1 dated September 20, 2021
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shall be applicable for Designated Employees associated with only
liquid fund scheme and also for Designated Employees associated with
other schemes in addition to liquid fund scheme, only with respect to the
quantum required to be invested in liquid fund schemes. For this
purpose, the risk value based on the risk-o-meter of the immediate
preceding month shall be considered.194
7.14.10. The previous month’s closing AUM shall be taken for apportioning the
investment across eligible schemes.
7.14.11. All non-cash benefits and perks shall be accounted for in CTC at the
perquisite value as per the Form 16 under Income Tax Act, 1961.
However, superannuation benefits and Gratuity paid at the time of
death/retirement, shall not be included in the CTC195.
7.14.12. The perquisite value of interest on loan availed by the Designated
Employees against the units from the AMC as specified in Paragraph
7.14.16(a) of this Master Circular shall not be included in the CTC.
7.14.13. Any unconditional compensation in any form which was granted before
April 28, 2021, but is unpaid as on April 28, 2021 shall not be included
in the CTC.
7.14.14. Designated Employees may set off their existing investments as on July
01, 2021, if any, against the fresh investments as required in the same
schemes.
7.14.15. Designated Employees may set off their units, for which the required
lock-in period of 3 years is expired, against the fresh investments
required to be made in the same schemes as per Paragraph 7.14 of this
Master Circular. In such cases, AMC shall ensure that such units are
locked in for the further period of 3 years or tenure of the scheme,
whichever is less.
7.14.16. Redemption of units:
(a) No redemptions of the said units shall be allowed during the lock-
in period. However, AMC may decide to have a provision of
borrowing from the AMC by Designated Employees against such
units in exigencies such as medical emergencies or on
humanitarian grounds, as per the policy laid down by the AMC.
(b) In case of retirement on attaining the superannuation age as
defined in the AMC service rules, the units shall be released from
the lock-in and the Designated Employee shall be free to redeem
the units, except for the units in close ended schemes where the
194 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/36 dated March 21, 2025
195 Refer SEBI Letter No. SEBI/HO/IMD/DF5/OW/ P/2021/ 30715/1 dated October 29, 2021
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units shall remain locked in till the tenure of the scheme is over.
However, on resignation or retirement of the Designated Employee
from the AMC before attaining the age of superannuation as
defined in the AMC service rules, the lock-in period, for the
investments made under Paragraph 7.14 of the Master Circular,
shall be reduced to 1 year from the end of the employment or
completion date of 3 year lock-in period, whichever is earlier,
except for the units in close ended schemes where the units shall
remain locked in till the tenure of the scheme is over.196
(c) Open Ended Schemes: After the expiry of the mandatory lock-in
period, Designated Employee can redeem their units in open
ended schemes, subject to compliance with SEBI (Prohibition of
Insider Trading) Regulations, 2015. Such redemption transactions
shall also be subject to the restriction on trade in closure period
and the requirement of pre-clearance from compliance officer
when closure period is not applicable, in terms of Clause 6 of
Schedule B1 of SEBI (Prohibition of Insider Trading) Regulations,
2015.
(d) For mandatory subscription/investment in the units of mutual funds
under Paragraph 7.14 of this Master Circular, the requirements
specified under Clause 6 of Schedule B1 of SEBI (Prohibition of
Insider Trading) Regulations, 2015 shall not be applicable.197
7.14.17. In the Fund of Funds schemes, only Fund Managers of such schemes
shall be required to invest.
7.14.18. Units, allotted in terms of the Paragraph 7.14 of this Master Circular,
shall be released from the mandatory lock-in period in case of death of
the Designated Employee.
7.14.19. AMC shall ensure that necessary audit trail is maintained to verify
compliance with the provisions of Paragraph 7.14 of this Master
Circular.
7.14.20. Clawback:
(a) Units allotted to the Designated Employees shall be subject to
clawback in the event of violation of Code of Conduct, fraud, gross
negligence by them, as determined by the Board. Upon clawback,
the units shall be redeemed and amount shall be credited to the
scheme.
196 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/36 dated March 21, 2025
197 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/36 dated March 21, 2025
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(b) In the event of violation of Code of Conduct under the MF
Regulations, fraud, gross negligence by Designated Employees,
the Nomination and Remuneration Committee of AMC or an
equivalent body under the Board of AMC (in case of AMCs where
the Nomination and Remuneration Committee has not been
constituted), shall undertake the preliminary examination and
provide recommendations to the Board for consideration, after
approval of the Trustees.198
7.14.21. Oversight:
(a) The compliance with Paragraph 7.14 of this Master Circular shall
be ensured by the AMCs and monitored by the Trustees. Any non-
compliance in this regard, shall be reported in the quarterly CTR
and HYTR.
(b) For the purpose of Paragraphs 7.14.5, 7.14.6, and 7.14.8, the risk
value based on the risk-o-meter of the immediate preceding month
shall be considered. Further, AMCs and Trustees shall have a
policy in place to ensure that such open ended schemes are similar
to the mandated scheme in terms of the nature of the underlying
portfolio.
7.14.22. Every scheme shall disclose the ‘compensation, in aggregate,
mandatorily invested in units for the Designated Employees’, under the
provisions of this Master Circular, on the website of Stock Exchanges.
The disclosure shall be at quarterly aggregate level showing the total
investment across all relevant employees in a specific scheme. The
disclosure shall be made within 15 calendar days from the end of each
quarter.199
7.14.23. These provisions shall not be applicable to Designated Employees
having role/ oversight only over ETFs, Index Funds, Fund of Funds
schemes investing only in a single ETF, Overnight Funds and existing
(i.e. as on September 30, 2021) close ended schemes.
7.15. Trade execution and allocation:
7.15.1. AMCs shall put in place a written down policy which inter-alia, detail the
specific activities, role and responsibilities of various teams engaged in
fund management, dealing, compliance, risk management, back-office
etc. with regard to order placement, execution of order, trade allocation
amongst various schemes and other related matters.
198 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/36 dated March 21, 2025
199 SEBI Circular SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/107 dated August 05, 2024
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7.15.2. The aforesaid policy shall ensure that all the schemes and its investors
are treated in a fair and equitable manner. Further, the policy shall be
approved by the Board of AMC and the Trustees and they shall ensure
compliance with following:
7.15.3. For orders pertaining to equity and equity related instruments:
(a) AMCs shall use an automated Order Management System
(hereinafter referred to as ‘OMS’), wherein the orders for equity
and equity related instruments of each scheme shall be placed by
the fund manager(s) of the respective schemes. However, a fund
manager may authorise an employee of the AMC for order
placement on his behalf, subject to adherence to the following:
(i) The order instructions to such employee by the fund manager
shall be through electronic mode i.e. either through e-mail or
other electronic utility, wherein scheme wise audit trail of
such orders starting from the instruction of the fund manager
is maintained along with time stamping of each stage of the
process.
(ii) The employee placing the order shall be bound by the same
requirements of maintaining confidentiality and the code of
conduct as applicable to the fund manager in this regard i.e.
in respect of order placement.
(b) Further, the orders in case of arbitrage transactions, stock lending
and borrowing transactions, passive schemes (such as Index
Funds and ETFs) and schemes investing primarily based on pre-
defined rules and models, where the discretion of the fund
manager is not required for placement of order, is not mandated to
be placed through OMS, subject to the following:
(i) The AMC shall document and demonstrate that no
judgement and discretion of the fund manager is required for
placement of such orders;
(ii) The AMCs shall ensure that orders in breach of applicable
regulatory limits and allocation limits as specified in SIDs,
shall not be placed and executed;
(iii) The fund manager shall provide the scheme wise details as
required for order placement such as value of transaction(s),
nature of transaction(s), etc. to the dealer;
(iv) The scheme wise audit trail of placement of orders (including
the information provided by the fund manager), order
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execution and trade allocation shall be maintained along with
time stamping of each stage of the process.
(c) At all points of time, the responsibility associated with order
placement shall continue to vest with the fund manager.
(d) In case a fund manager is managing multiple schemes, the fund
manager shall necessarily place scheme wise order.
(e) All regulatory limits and allocation limits as specified in SID shall
be in-built in the OMS to ensure that orders in breach of such limits
are not accepted by the OMS. AMCs may further place soft limits
for internal control and risk management based on its internal
policy. Further, any change in limits specified in OMS shall be
subject to the approval of Compliance and Risk Officer.
(f) All orders of fund manager(s) shall be received by dedicated
dealer(s) responsible for order placement and execution.
However, in case of order(s) for arbitrage transactions, stock
lending and borrowing transactions, passive schemes (such as
Index Funds and ETFs) and schemes investing primarily based on
pre-defined rules and models, the requirement of a dedicated
dealer shall not be mandatory.
(g) The internal policy of AMC may also provide certain scenarios
within the regulatory limits, wherein, prior approval of Compliance
or Risk Officer would be required through OMS before the order is
received by the dealer.
7.15.4. Requirements with respect to investment in all instruments
(a) AMC shall ensure that the dealing desk is suitably staffed and
comply with the following:
(i) All conversations of the dealer shall be only through the
dedicated recorded telephone lines.
(ii) No mobile phones or any other communication devices other
than the recorded telephone lines shall be allowed inside the
dealing room.
(iii) Restricted access to internet facilities on computers and
other devices inside the dealing room which shall be used for
activities related to trade execution only.
(iv) No sharing of information by dealer through any mode,
except for trade execution under the approved internal policy.
(b) Orders by dealer can be placed either for each scheme individually
or pooled on the basis of orders from multiple schemes. The trade
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allocation policy of the AMCs shall inter-alia detail (i) specific
situations (not generic) wherein the orders by dealers shall be
placed for each scheme individually or pooled from multiple
schemes, (ii) the timeline to be considered for pooling of orders in
case of multiple schemes.
(c) In case of pooled orders, post allocation of trades shall be on pro-
rata basis as per the size of the order placed. The said allocation
shall be based on weighted average price. The policy shall clearly
include scenarios / situations (e.g. redemption pressure) in which
deviation from the allotment of units on pro-rata basis would be
permissible, if at all. Further, the deviations shall be on account of
exigency only and require prior written approval of Chief
Investment Officer, Risk Officer and the Compliance Officer with
detailed rationale for such deviation.
(d) In case of scenarios, wherein, the mutual funds are required to
place certain margins /collaterals in order to execute certain
transactions, the policy shall include details on how such margins
/ collaterals shall be segregated / placed from amongst various
schemes, without affecting the interest of investors of any scheme.
7.15.5. Monitoring of Compliance:
(a) AMC shall have a system based monitoring mechanism to ensure
compliance with the requirements under Paragraphs 7.15.3 and
7.15.4 above.
(b) Audit trail of activities as detailed in Paragraph 7.15.3 above
related to order placement, trade execution and allocation shall be
available in the system. Further, there shall be time stamping with
respect to order placed by fund manager (or the order placed by
the employee of the AMC authorized by the fund manager), order
placed by dealer, order execution and trade allocation in the OMS.
The audit trail and time stamping of all other orders (including
orders through RFQ platform) not placed through OMS shall also
be adequately maintained.
(c) Any non-compliance and all material information in this regard
shall be reported to trustees on quarterly basis. Trustees shall
inform the same to the Board in their HYTR.
7.16. Recording of Investment Decisions
7.16.1. AMC(s) shall exercise due diligence and care in all investment
decisions as would be exercised by other persons engaged in the
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same business. AMC(s) shall maintain records in support of each
investment decision which will indicate data, facts and opinion leading
to that decision. While broad parameters for investments can be
prescribed by the Board of the AMC, the basis for taking individual scrip
wise investment decision in equity and debt securities shall be recorded.
A detailed research report analyzing various factors for each investment
decision taken for the first time shall be maintained and the reasons for
subsequent purchase and sales in the same scrip shall also be
recorded. The contents of the research reports may be decided by the
AMC(s) and the Trustees.
7.16.2. The Board of the AMC shall develop a mechanism to verify that due
diligence is being exercised while making investment decisions
especially in cases of investment in unlisted and privately placed
securities, unrated debt securities, securities classified as below
investment grade or default, transactions where associates are involved
and instances where the performance of the scheme(s) is poor.
7.16.3. AMC(s) shall report compliance with these requirements in their
periodical reports to the Trustees and the Trustees shall report the same
to the Board in the HYTR. Trustees shall also check compliance with
these Guidelines through independent auditors or internal and/or
statutory auditors or other systems developed by them.
7.17. Institutional mechanism by Asset Management Companies for
identification and deterrence of potential market abuse including front-
running and fraudulent transactions in securities200
7.17.1. In terms of Regulation 22(8)(b), the institutional mechanism established
by AMCs shall comply with the following requirements:
(a) Accountability:
(i) The Chief Executive Officer or Managing Director or such
other person of equivalent or analogous rank and Chief
Compliance Officer of the asset management company shall
be responsible and accountable for implementation of the
institutional mechanism.
(b) Alert-based surveillance mechanism:
(i) AMCs shall develop and implement systems and procedures
to generate and process alerts in a timely manner.
(c) Processing of alerts:
200 SEBI Circular SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/107 dated August 05, 2024
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(i) During the processing of alerts, AMCs shall consider and
review all recorded communications including chats, emails,
access logs of dealing room and CCTV footage (if available).
(ii) AMCs shall also maintain and monitor entry logs to the
AMCs’ premises.
(d) Standard operating procedures:
(i) The AMCs shall formulate written policies and procedures for
conducting examination and taking action in case of potential
market abuse including front-running and fraudulent
transactions in securities by its employees and connected
entities.
(ii) Such policies/procedures shall be approved by Board of
AMCs.
(e) Action on suspicious alerts:
(i) AMCs shall take suitable action upon becoming aware of any
potential market abuse by its employees or brokers / dealers,
including suspension or termination of such persons/entities.
(f) Escalation process:
(i) AMCs shall have an escalation process to promptly inform
Board of AMC and Trustees, regarding instances of potential
market abuse, if any, and results of the examination
conducted by the AMCs.
(g) Whistle blower policy:
(i) AMCs shall have a documented whistle blower policy in line
with Regulation 22(8)(c).
(h) Periodic review:
(i) AMCs shall ensure that the procedures and/or systems put in
place are reviewed and updated at appropriate periodic
intervals.
7.17.2. Trade related information from exchanges:
(a) For effective functioning of the institutional mechanism, the stock
exchanges and depositories have developed systems, in
consultation with AMFI, to enable data sharing with AMCs.
7.17.3. Reporting to the Board:
(a) In reference to alerts generated by AMCs as mentioned under
Paragraph 7.17.1(b) above, AMCs shall report all examined alerts
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to the Board along with action taken, in the CTR and the Half-
HYTR submitted to the Board, in the following format:
Sr. Alert type and Observations made Actions taken
No. description from the alert by the AMC
7.17.4. The detailed implementation standards issued by AMFI on Institutional
Mechanism, in consultation with the Board, shall mandatorily be
followed by all AMCs.
7.18. Prohibition of insider trading in units of mutual funds201
7.18.1. In terms of Regulation 5(E)(1) of PIT Regulations, AMCs shall disclose
the details of the holdings of Designated Persons of AMCs, trustees and
their immediate relatives on aggregate basis within 10 calendar days
from the end of each calendar quarter as per the Format No. 8A.
7.18.2. In terms of Regulation 5(E)(2) of PIT Regulations, details of all the
transactions in the units of its own mutual funds, above the threshold
amount which aggregates to a value in excess of INR 15 Lakhs, in one
transaction or a series of transactions over any calendar quarter, per
PAN across all schemes excluding the exempted schemes, executed
by the Designated Persons of asset management company, trustees
and their immediate relatives shall be reported by the concerned person
to the Compliance Officer of AMC within two business days from the
date of transaction.
7.18.3. In terms of Regulation 5(E)(3) and 5(E)(4) of PIT Regulations, the
transactions reported under Regulation 5(E)(2) of PIT Regulations shall
be disclosed as per the Format No. 8B.
7.18.4. In terms of Clause 12 of Schedule B1 and Clause 11A of Schedule C of
PIT Regulations, the observed violations of PIT Regulations shall be
disclosed as per the Format No. 8C.
201 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/144 dated October 22, 2024
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PART II – SCHEME GOVERNANCE
7.19. Minimum Number of investors202
7.19.1. Applicability for an open-ended scheme
(a) The Scheme/Plan shall have:
(i) a minimum of 20 investors and
(ii) no single investor shall account for more than 25% of the
corpus of the Scheme/Plan(s).
(b) If either/both of such limit(s) is/are breached during the NFO of the
Scheme, it shall be ensured that within a period of three months or
the end of the succeeding calendar quarter from the close of the
NFO of the Scheme, whichever is earlier, the Scheme complies
with these two conditions.
(c) In case the Scheme / Plan(s) does not have a minimum of 20
investors in the stipulated period, the provisions of Regulation
36(2)(c) shall become applicable automatically without any
reference from the Board and accordingly the Scheme / Plan(s)
shall be wound up and the units shall be redeemed at applicable
NAV.
(d) The average net assets of the scheme shall be calculated daily
and any breach of the 25 % holding limit by an investor shall be
determined. At the end of the quarter, the average of daily holding
by each such investor is computed to determine whether that
investor has breached the 25 % limit over the quarter. If there is a
breach of the 25% limit by any investor over the quarter, a
rebalancing period of one month shall be allowed and thereafter
the investor who is in breach of the rule shall be given 15 calendar
days’ notice to redeem his exposure over the 25 % limit. Failure on
the part of the said investor to redeem his exposure over the 25 %
limit within the aforesaid 15 calendar days would lead to automatic
redemption by the Mutual Fund on the applicable Net Asset Value
on the 15th calendar day of the notice period.
(e) The two conditions mentioned above shall also be complied within
each subsequent calendar quarter thereafter, on an average basis,
as specified by the Board.
7.19.2. Applicability for a Close ended scheme/Interval scheme
202 SEBI Circular No. SEBI/IMD/CIR No.10/22701/03 dated December 12, 2003, SEBI Circular No. SEBI/IMD/CIR
No.1/42529/05 dated June 14, 2005.
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(a) The Scheme(s) and individual Plan(s) under the Scheme(s) shall
have:
(i) A minimum of 20 investors and
(ii) No single investor shall account for more than 25% of the
corpus of the Scheme(s)/Plan(s).
(b) These conditions shall be complied with immediately after the
close of the NFO itself i.e. at the time of allotment.
(c) In case of non-fulfilment with the condition of minimum 20
investors, the Scheme(s)/Plan(s) shall be wound up in accordance
with Regulation 36 (2)(c) automatically without any reference from
SEBI.
(d) In case of non-fulfilment with the condition of 25% holding by a
single investor on the date of allotment, the application to the
extent of exposure in excess of the stipulated 25% limit shall be
liable to be rejected and the allotment shall be effective only to the
extent of 25% of the corpus collected. Consequently, such
exposure over 25% limits shall be refunded within 6 weeks of the
date of closure of the NFO.
(e) For interval scheme the aforesaid provision shall be applicable at
the end of NFO and specified transaction period.
(f) Requisite disclosure in this regard shall be made in the SID.
7.19.3. Determination of breach:
(a) The average shall be calculated, at the end of each quarter, on the
basis of number of investors at the end of the business hours of
the scheme on a daily basis.
(b) To determine breach of 25% holding limit by an investor, net assets
under the scheme shall be calculated daily and the daily holding
limit shall be determined accordingly. At the end of the quarter,
average daily holding by each investor shall be calculated and any
breach of the 25% holding limit will be accordingly determined.
7.19.4. Applicability:
(a) These Guidelines are applicable at the Portfolio level.
(b) These Guidelines are not applicable to ETFs.
7.19.5. Redemptions: Redemptions effected pursuant to these Guidelines
shall be completed within 10 calendar days from the day of winding up
of the scheme(s) and/or plan(s).
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7.19.6. Reporting to the Board: Compliance with these Guidelines shall be
reported in CTRs and HYTRs.
7.20. Minimum Assets under Management (AUM)203
7.20.1. The minimum subscription amount for different categories of schemes
shall be as under:
Sr. Scheme category Minimum subscription
No. amount at the time of
NFO (INR)
(a) Debt Schemes and Debt Oriented 20 crores
Hybrid Schemes
(b) Debt ETFs/ Index Funds 10 crores
(c) Other ETFs/ Index Funds 5 crores
(d) All other schemes 10 crores
7.20.2. In case of open ended debt oriented schemes, an average AUM of 20
crores on half yearly rolling basis shall be maintained.
7.20.3. In case of breach of Paragraph 7.20.2 above, the AMC shall scale up
the AUM of such scheme within a period of six months, failing which the
provisions of Regulation 36(2)(c) shall become applicable204.
7.20.4. The confirmation on compliance of the above shall be reported to the
Board in the HYTR.
7.20.5. In case of ETFs, alternative to launch of NFO, the AMC may contribute
the initial fund for unit creation. Subsequently, the AMC may transfer the
units of such ETFs to Market Makers or other investors, subject to
compliance with all applicable provisions for launch of ETFs205.
7.21. Scheme Performance Review
7.21.1. AMCs and Trustees shall review the performance of their schemes on
periodic basis206. Such review can take place by comparing the
performance of the schemes with benchmark indices and with the
performance of the entire Mutual Funds industry by relying on data
published from time to time by independent research agencies and
financial newspapers and journals. Corrective action if required may be
203 SEBI Circular No. Cir/IMD/DF/15/2014 dated June 20, 2014
204 SEBI Circular No. SEBI Circular No. Cir/IMD/DF/15/2014 dated June 20, 2014
205 SEBI Circular No. SEBI/HO/IMD/DOF2/P/CIR/2022/69 dated May 23, 2022
206 SEBI Circular No. dated July 27, 2000 & SEBI Cir 16/400/02 dated March 26, 2002.
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taken in case of unsatisfactory performance. The compliance of the
same shall be reported in the CTR and HYTR207 (while reporting
compliance of Regulation 22(1)(b) on exercise of due diligence in
investment decisions).
7.22. Benchmarks for Mutual Fund Schemes208209
7.22.1. The following are the broad guidelines for selection of benchmarks:
Type of scheme Guidelines to select benchmark
Equity Schemes Appropriately select any of the indices
available, (e.g. BSE (Sensitive) Index, S&P
CNX Nifty, BSE 100, BSE 200 or S&P CNX
500 etc.) depending on the investment
objective and portfolio of the scheme(s).
Debt Schemes210 Benchmarks developed by research and
rating agencies shall be used.
Sector or Thematic Any sectoral index as published by the Stock
schemes Exchanges and other reputed agencies.
7.22.2. There shall be a two-tiered structure for benchmarking of schemes for
certain categories of schemes. The first tier benchmark shall be
reflective of the category of the scheme, and the second tier benchmark
shall demonstrate the investment style / strategy of the Fund Manager
within the category.
7.22.3. AMFI shall publish:
(a) Benchmarks intended to be used by AMCs as first tier benchmarks
(b) Benchmarks intended to be used as first tier benchmark as per the
Potential Risk Class Matrix by AMCs for open ended debt
schemes.
7.22.4. The second tier Benchmark is optional and shall be decided by the
AMCs according to Investment Style/Strategy of the Index.
207 SEBI Circular No. dated July 27, 2000 & SEBI Cir 16/400/02 dated March 26, 2002.
208 SEBI Circular No. MFD/CIR/16/400/02 dated March 26, 2002, SEBI Circular No. MFD/CIR/01/071/02 April 15, 2002
209 SEBI Circular No. SEBI/IMD/CIR No 18 / 198647 /2010 dated March 15, 2010, SEBI circular no. SEBI/HO/IMD/IMD-II
DF3/P/CIR/2021/652 dated October 27, 2021. Refer SEBI letter No. SEBI/HO/IMD/POD-II/P/OW/2023/50162/1 dated
December 14, 2023
210 SEBI Circular No. MFD/CIR/01/071/02 April 15, 2002
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7.22.5. The following are the guiding principles for selection of first and second
tier benchmarks:
Type of scheme First tier Second Tier
benchmark benchmark
Equity Schemes One Broad Market Bespoke according to
Index per Index Investment
Provider for each Style/Strategy of the
category Index
e.g.: BSE 100 Index e.g.: Nifty 50 Index
or NSE 100 Index for
Large Cap Fund
Category
Debt Schemes One Broad Market Bespoke according to
Index per Index Investment
Provider for each Style/Strategy of the
category that is a Index
representative of the
e.g.: AAA Bond Index
fund’s portfolio.
e.g.: NIFTY Ultra
Short Duration Debt
Index or CRISIL Ultra
Short Term Debt
Index for Ultra Short
Duration Fund
Category
In case of money
market/ liquid funds,
Suitable Money
Market Instrument or
a combination of
such instruments.
Hybrid Schemes There would be a single benchmark, i.e.,
Broad Market Benchmark wherever available
or bespoke to be created for schemes, which
would then be applicable across industry.
In case of Hybrid Schemes (with equity
investments of 40%-60%), Tailored index
having 50% of its weight selected from any
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equity index as above and the other 50% from
an appropriate bond return index.
Thematic / Sectoral There would be a single benchmark as
schemes characteristics of the schemes are already
tapered according to the theme/sector.
Index Funds and There would be a single benchmark as these
Exchange Traded Funds schemes replicate an underlying index.
(ETFs):
Fund of Funds Schemes Similar to Index Fund and ETFs, if a FoF
(FoFs): scheme is investing in a single fund, then
benchmark of the underlying scheme shall be
used for corresponding FoF.
However, in case a FoF scheme invests in
multiple schemes, the benchmark
prescribed211 by the Board, Framework for
Fund of Fund schemes with multiple
underlying funds, shall apply.
For Other Schemes: Depending on underlying asset allocation,
Broad Market benchmark may be arrived at.
7.22.6. The benchmark indices for the MF Scheme(s) may be decided by the
AMC(s) and Trustees. Any change at a later date in the benchmark
index shall be recorded and reasonably justified212.
7.23. Benchmarking of Scheme's performance to Total Return Index213
7.23.1. Total Return variant of an Index (TRI) takes into account all dividends/
interest payments that are generated from the basket of constituents
that make up the index in addition to the capital gains. Hence, TRI is
more appropriate as a benchmark to compare the performance of
mutual fund schemes.
7.23.2. With an objective to enable the investors to compare the performance
of a scheme vis-a-vis an appropriate benchmark, it has been decided
that -
211 SEBI Circular No HO/24/13/15(2)2026-IMD-RAC4/I/5764/2026 dated February 26, 2026
212 SEBI Circular No. MFD/CIR/16/400/02 dated March 26, 2002.
213 SEBI circular no. HO/IMD/IMD-I DOF2/P/CIR/2021/550 dated April 12, 2021
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(a) Selection of a benchmark for the scheme of a mutual fund shall be
in alignment with the investment objective, asset allocation pattern
and investment strategy of the scheme.
(b) The performance of the schemes of a mutual fund shall be
benchmarked to the Total Return variant of the Index chosen as a
benchmark as stated in Paragraph 7.23.2(a) above.
(c) Mutual funds shall use a composite CAGR figure of the
performance of the PRI (Price Return Index) benchmark (till the
date from which TRI is available) and the TRI (subsequently) to
compare the performance of their scheme in case TRI is not
available for that particular period(s).
7.23.3. Illustration of calculation of composite CAGR:
(a) ABC scheme had been launched on August 2, 1995. The
benchmark PRI values are available from the date of inception of
the fund. The benchmark TRI values are available from June 30,
1999. The calculation of a composite benchmark performance
return in CAGR terms would be as given below:
1
(Time period from
the last day of the
month preceding
the date of
advertisement –
date of inception of
the scheme)
Benchmark PRI value as on Benchmark TRI value as on last day
date of introduction of TRI of the month preceding the date of
X
value advertisement
Benchmark PRI value as on Benchmark TRI value as on date of
date of inception of the introduction of TRI value
scheme
(b) The aforesaid is explained with an example:
Example: Consolidated Benchmark CAGR (PRI and TRI)
Date Benchmark PRI values Benchmark TRI values
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02/08/1995 1007.57
30/06/1999 1187.70 1256.38
30/11/2017 10226.55 13966.58
CAGR 12.20%
(c) Thus, in the above example (for advertisements in the month of
December, 2017 the last of the preceding month would be
November 30, 2017),
CAGR= [(1187.70/1007.57) * (13966.58/1256.38) ^ (1/22.3452)]-1
[1 year= 365 days]
CAGR= 12.20%
7.23.4. Mutual funds shall use the composite CAGR as explained above,
subject to making the following disclosure:
*As TRI data is not available since inception of the scheme, benchmark
performance is calculated using composite CAGR of XYZ (name of the
benchmark index) PRI values from date.... to date... and TRI values
since date...."
7.24. Timelines for deployment of funds collected by AMCs in NFO as per
asset allocation of the scheme214
7.24.1. AMCs shall ensure the following in respect of deployment of funds
collected in an NFO:
(a) The AMC shall specify achievable timelines in the SID of a scheme
regarding the deployment of the funds as per the specified asset
allocation of the scheme and garner funds during the NFO
accordingly.
(b) The AMC shall deploy the funds garnered in an NFO within 30
business days from the date of allotment of units.
(c) In an exceptional case, if the AMC is not able to deploy the funds
in 30 business days, reasons in writing, including details of efforts
taken to deploy the funds, shall be placed before the Investment
Committee of the AMC.
(d) The Investment Committee may extend the timeline by 30
business days, while also making recommendations on how to
214 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/23 dated February 27, 2025
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ensure deployment within 30 business days going forward and
monitoring the same. The Investment Committee shall examine
the root cause for delay in deployment before granting approval for
part or full extension. The Investment Committee shall not
ordinarily give part or full extension where the assets for any
scheme are liquid and readily available.
(e) Trustees shall monitor the deployment of funds collected in NFO
and take steps, as may be required, to ensure that the funds are
deployed within a reasonable timeframe
(f) In case the funds are not deployed as per the asset allocation
mentioned in the SID within the aforesaid mandated plus extended
timelines, AMC shall:
(i) not be permitted to receive fresh flows in the same scheme
till the time the funds are deployed as per the asset allocation
mentioned in the SID.
(ii) not be permitted to levy exit load, if any, on the investors
exiting such scheme(s) after 60 business days of not
complying with the asset allocation of the scheme.
(iii) inform all investors of the NFO, about the option of an exit
from the concerned scheme without exit load, via email, SMS
or other similar mode of communication
(iv) report deviation, if any, to Trustees at each of the above
stages.
(g) The above provisions shall be applicable to all NFOs.
(h) To effectively manage the fund flows in NFO, the fund manager
may extend or shorten the NFO period (except for ELSS
schemes), based on his view of the market dynamics, availability
of assets and his ability to deploy funds collected in NFO.
However, the same shall be subject to compliance with Paragraph
1.7.1 of this Master Circular.
7.24.2. To discourage mis-selling of mutual funds schemes by Mutual Fund
Distributors, in terms of Regulation 66(6), in case of switch transaction
to NFO of a regular plan of mutual fund scheme from an existing scheme
managed by the same AMC, the AMC shall ensure that the distribution
commission paid is lower of the commissions offered under the two
schemes of switch transaction. The detailed guidelines in this regard
have been specified by AMFI, in consultation with the Board.
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PART III – SYSTEMS AUDIT FRAMEWORK FOR MUTUAL FUNDS/AMCs215
7.25. Systems audit framework for Mutual Funds/ AMCs
7.25.1. Considering the importance of systems audit in technology driven asset
management activity and to enhance and standardize the systems
audit, guidelines in this regard are placed at Annexure 7. These
guidelines are indicative and not exhaustive in nature.
7.25.2. The aforementioned audit shall encompass audit of systems and
processes, inter alia, related to integration of front office system with the
back office system, fund accounting system for calculation of net asset
values, financial accounting and reporting system, Unit-holder
administration and servicing systems for customer service, funds flow
process, system processes for meeting regulatory requirements,
prudential investment limits and access rights to systems interface.
7.25.3. Trustees of Mutual Fund / AMCs are advised to conduct systems audit
on an annual basis by an independent CISA / CISM qualified or
equivalent auditor to check compliance with the provisions of Paragraph
7.25.1 of this Master Circular.
7.25.4. AMCs are further advised to take necessary steps to put in place
systems for implementation of these provisions. The exception report as
per the Format No. 9B provided shall be placed before the Technology
Committee for review. The Technology Committee after review shall
place the same before the AMC & Trustee Board. Thereafter, exception
observation report along with trustee comments shall be communicated
to the Board within 6 months of the respective financial year. Further,
System Audit Reports shall be made available for inspection.
215 SEBI Circular No SEBI/HO/IMD/DF2/CIR/P/2019/57dated April 11, 2019
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PART IV - ROLE OF MUTUAL FUNDS IN CORPORATE GOVERNANCE OF
PUBLIC LISTED COMPANIES216
7.26. Role of Mutual Funds in Corporate Governance of Public Listed
Companies:
7.26.1. MFs/AMCs should play an active role in ensuring better corporate
governance of listed companies.
7.26.2. AMCs shall disclose their general policies and procedures for exercising
the voting rights in respect of shares held by them on the website of the
respective AMCs as well as in the annual report distributed to the unit
holders217.
7.26.3. 218All Mutual Fund schemes, including in respect of passive investment
schemes like Index Funds, ETFs etc., shall cast votes compulsorily in
respect of all resolutions of investee companies.
7.26.4. AMCs are required to disclose on the website of the respective AMC as
well as in the annual report distributed to the unit holders the actual
exercise of their proxy votes in the AGMs/EGMs of the investee
companies in respect of the following matters:
(a) Corporate governance matters, including changes in the state of
incorporation, merger and other corporate restructuring, and anti-
takeover provisions;
(b) Changes to capital structure, including increases and decreases
of capital and preferred stock issuances;
(c) Stock option plans and other management compensation issues;
(d) Social and corporate responsibility issues;
(e) Appointment and removal of directors;
(f) Any other issue that may affect the interest of the shareholders in
general and interest of the unit-holders in particular.
7.26.5. Related party transactions of the investee companies (excluding own
group companies). For this purpose, “Related Party Transactions” shall
have same meaning as assigned to them in clause (zc) of Sub-
Regulation (1) of Regulation (2) of the SEBI (Listing Obligation and
Disclosure Requirements) Regulations, 2015.
216 SEBI Circular No. SEBI/IMD/CIR No 18 / 198647 /2010 dated March 15, 2010, Refer SEBI Letter No. SEBI/HO/IMD-II/IMD-
II_DOF11/P/OW/2022/52316/1 dated October 14, 2022
217 Refer SEBI emails dated June 23, 2011
218 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2021/29 dated March 05, 2021
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7.26.6. AMCs shall be required to record and disclose specific rationale
supporting their voting decision (for, against or abstain) with respect to
each vote proposal219.
7.26.7. AMCs shall additionally be required to publish summary of the votes
cast across all its investee company and its break-up in terms of total
number of votes cast in favor, against or abstained from.
7.26.8. 220AMCs shall be required to make disclosure of votes cast on their
website (in machine readable spreadsheet format) on a quarterly basis,
within 10 working days from the end of the quarter as per the Format
No. 7C. A detailed report in this regard along with summary thereof shall
also be disclosed on their website as per the Format No. 7C. Further,
AMCs shall provide a web link in their annual reports regarding the
disclosure of voting details.
7.26.9. Further, AMCs shall be required to obtain certification on the voting
reports being disclosed by them on an annual basis. Such certification
shall be obtained from a “scrutinizer” in terms of Rule 20 (3) (ix) of
Companies (Management and Administration) Rules, 2014 and any
future amendment/s to the said Rules thereof. The same shall be
submitted to the trustees and also disclosed in the relevant portion of
the Mutual Funds' annual report & website221.
7.26.10. Board of AMCs and Trustees shall review and ensure that AMCs have
voted on all decisions that may affect the interest of investors and the
rationale recorded for the voting decision is prudent and adequate. The
confirmation on the same, along with any adverse comments made by
auditors, shall be reported to the Board in the HYTR.
7.26.11. In case of the Mutual Funds having no economic interest on the day of
voting, it may be exempted from compulsorily casting of votes.
7.26.12. The vote shall be cast at Mutual Fund Level. However, in case Fund
Manager/(s) of any specific scheme has strong view against the views
of Fund Manager/(s) of the other schemes, the voting at scheme level
shall be allowed subject to recording of detailed rationale for the same.
7.26.13. Fund Managers/Decision makers shall submit a declaration on quarterly
basis to the Trustees that the votes cast by them have not been
influenced by any factor other than the best interest of the unit holders.
Further, Trustees in their HYTR to the Board, shall confirm the same.
219 SEBI Circular No. CIR/IMD/DF/05/2014 dated March 24, 2014
220 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2021/024 dated March 04, 2021
221 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2016/68 dated August 10, 2016
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7.26.14. All Mutual Funds shall mandatorily follow the Stewardship Code as
placed at Annexure 8, in relation to their investment in listed equities222.
222 SEBI Circular No. CIR/CFD/CMD1/ 168 /2019 dated December 24, 2019 and SEBI Circular No.
SEBI/HO/CFD/CMD1/CIR/P/2020/55 dated March 30, 2020.
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CHAPTER 8: SECONDARY MARKET ISSUES
8.1. Non Applicability of Listing Deposit223
8.1.1. The requirement of collecting listing deposit as specified under Circular
No. SE/2936 dated April 6, 1992 shall not be applicable to Mutual Funds
in respect of the schemes floated by them for public subscription which
are sought to be listed on the stock exchanges.
8.2. Listing of Mutual Fund Schemes under process of winding up224:
8.2.1. The units of Mutual Fund schemes which are in the process of winding-
up in terms of Regulation 36(2) shall be listed on recognized stock
exchange, subject to compliance with listing formalities as stipulated by
the stock exchange.
8.2.2. Trading on stock exchange mechanism will not be mandatory for
investors, rather, if they so desire, may avail an optional channel to exit
provided to them.
8.2.3. Initially, trading in units of such a listed scheme that is under the process
of winding up, shall be in dematerialised form.
8.2.4. AMCs shall enable transfer of such units which are held in form of
Statement of Account (SoA) / unit certificates.
8.2.5. The AMC, its sponsor, employees of AMC and Trustee shall not be
permitted to transact (buy or sell) in the units of such schemes that are
under the process of being wound up. The compliance of the same shall
be monitored both by the Board of AMC and Trustee.
8.2.6. Detailed operational modalities for trading and settlement of units of MF
schemes that are under the process of winding up, have been finalized
by the Stock Exchanges, where units of such schemes are being listed,
in consultation with SEBI. Such operational modalities include the
following:
(a) Mechanism for order placement, execution, payment and
settlement;
(b) Enabling bulk orders to be placed for trading in units;
(c) Issue related to suspension of trading, declaration of date for
determining the eligibility of unitholders etc. in respect of payments
to be made by the AMC as part of the winding up process;
223 SEBI Circular No. SMD-II(N)/2113/94 dated April 12, 1994. Further, in this regard, circulars issued by SEBI from time to
time may be considered.
224 SEBI Circular No. SEBI/HO/IMD/DF3/CIR/P/2020/086 dated May 20, 2020
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(d) Disclosures to be made by AMCs including disclosure of NAV on
daily basis and scheme portfolio periodically etc.
8.2.7. The stock exchange shall develop a mechanism along with RTA for
trading and settlement of such units held in the form of SoA / Unit
Certificate.
8.3. Payment of Margins225
8.3.1. Mutual funds shall, for the purpose of executing transactions in
securities market, maintain and remit margins in accordance with the
regulatory guidelines prescribed by SEBI and the directives issued by
the Stock Exchanges from time to time.
8.4. Unique Client Codes226
8.4.1. Mutual Funds are not permitted to operate in the securities market
without furnishing a valid Unique Client Code (UCC)227.
8.4.2. Mutual Funds shall obtain UCC from the Bombay Stock Exchange Ltd.
(BSE) or National Stock Exchange Ltd. (NSE) whenever a new
scheme(s) or plan(s) (wherever the portfolio of the plans is different) is
launched228.
8.4.3. Such UCC shall be obtained before commencing the trading on behalf
of the scheme(s)/plan(s).
8.4.4. At the time of order entry, the UCC pertaining to the parent Mutual Fund
shall be provided by AMC and the allocation of trades to individual
schemes shall be done during the post-closing session229.
8.4.5. The UCC shall be shared with the unit holders to facilitate tax benefits
linked to payment of Securities Transaction Tax (STT).
8.5. Trading in Derivatives Contracts230231
8.5.1. Mutual Fund schemes are permitted to participate in derivatives market,
subject to compliance with the regulatory guidelines and exposure limits
specified by the board in this regard from time to time.
8.5.2. Mutual Fund schemes are also permitted to undertake transactions in
Forward Rate Agreements and Interest Rate Swaps with banks, Primary
225 SEBI Circular No. MFD/CIR/9/230/2001 dated August 14, 2001
226 SEBI Circular No. MFD/CIR No.8/290/01 dated July 30, 2001, SEBI Circular No. SEBI/SMD/SE/11/2003/31/03 dated March
31, 2003, SEBI Circular No. SEBI/IMD/CIR No.01/1756/04 dated January 27, 2004, SEBI Circular No. MRD/DoP/SE/Cir-
35/2004 dated October 26, 2004, SEBI Circular No. SEBI/IMD/CIR No.2/46603/05 dated August 10, 2005. Further, in this
regard, circulars issued by SEBI from time to time may be considered
227 SEBI Circular No. SMDRP/Policy/Cir-39/2001 dated July 18, 2001.
228 SEBI Circular No. SEBI/IMD/CIR No.01/1756/04 dated January 27, 2004.
229 SEBI Circular No. MRD/DoP/SE/Cir-35/2004 dated October 26, 2004.
230 SEBI Circular No. DNPD/Cir-29/2005 dated September 14, 2005; SEBI Circular No. DNPD/Cir-30/2006 dated January 20,
2006, SEBI Circular No. SEBI/DNPD/Cir-31/2006 dated September 22, 2006.
231 SEBI Circular No. SEBI/MFD/CIR No.03/158/03 dated June 10, 2003.
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Dealers & Financial Institutions as per applicable RBI Guidelines232.
Further, mutual fund schemes are permitted to trade in interest rate
derivatives through the Stock Exchanges subject to requisite
disclosures in the SID233.
8.5.3. Appropriate disclosures shall be made in the offer document regarding
(a) the extent and manner of participation of the schemes of the
Mutual Funds in derivative instruments and
(b) the risk factors, which shall be explained by suitable numerical
examples.
8.5.4. Existing schemes of Mutual Funds, whose SIDs do not envisage
investments in derivatives, may participate in derivatives market subject
to the following conditions234:
(a) The extent and the manner of the proposed participation in
derivatives shall be disclosed to the unit holders.
(b) The risks associated with such participation shall be disclosed and
explained by suitable numerical examples.
(c) Prior to commencing participation in derivatives, the scheme shall
comply with the provisions of Regulation 22(9)(c).
8.6. Position limits for derivative instruments
8.6.1. The Mutual Funds shall be treated at par with a registered FII in respect
of position limits in index futures, index options, stock options and stock
futures contracts. The Mutual Funds shall be considered as trading
members like registered FIIs and the schemes of Mutual Funds will be
treated as clients like sub-accounts of FIIs235.
8.6.2. The following position limits236 in IRF shall be applicable for Mutual Fund
level and scheme level:
(a) Mutual Funds shall have position limits as applicable to trading
members presently.
(b) Schemes of Mutual Funds shall have position limits as applicable
to clients presently.
232 RBI Circular dated November 1, 1999.
233 SEBI Circular No. SEBI/MFD/CIR No.03/158/03 dated June 10, 2003.
234 Please refer SEBI Circular No SEBI/HO/IMD/DF2/CIR/P/2017/13 dated February 20, 2017 ‘Participation in derivatives
market by Mutual Funds.’
235 SEBI Circular No. DNPD/Cir-29/2005 dated September 14, 2005.
236 SEBI Circular No. CIR/MRD/DRMNP/26/2014 dated September 15, 2014
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8.6.3. Positions limits as specified by the Board for Mutual Funds and its
schemes from time to time shall be applicable237.
237 For position limits, please refer SEBI Master Circular for Stock Exchanges and Clearing Corporations, SEBI Circular No
DNPD/Cir – 29/2005 Dated September 14, 2005 and subsequent circulars issued in this regard from time to time.
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CHAPTER 9: NET ASSET VALUE238
9.1. Methodology of Computation of NAV
9.1.1. 239Mutual Funds/AMCs shall disclose the methodology adopted for the
computation of NAV of mutual fund schemes. Further, the methodology
for determining the sale and repurchase price of units shall be explained
by way of simple numerical illustration. These disclosures shall be
maintained at all relevant places, including the respective websites of
the AMC and AMFI, as well as within the Scheme Information
Documents.
9.1.2. The NAV of mutual fund units scheme shall be computed as prescribed
below:
Market or Fair Value of Scheme's investments +
Current Assets - Current Liabilities and Provision
NAV (in Rs. terms) = --------------------------------------------------------------
Number of Units outstanding under Scheme
on the Valuation Date
9.1.3. Rounding of NAVs240:
(a) AMCs shall round off NAV up to four decimal places for index funds
and all types of debt oriented schemes.
(b) For all other schemes, AMCs shall round off NAVs up to two
decimal places. However, Mutual Funds can round off the NAVs
up to more than two decimal places, if they so desire. Relevant
disclosure in this regard shall be made in the SID/SAI.
9.2. Sale and Repurchase price of MF units
9.2.1. 241The formula for the determination of sale and repurchase price of
mutual fund units shall be as follows:
(a) Sale Price = Applicable NAV
(b) Repurchase Price = Applicable NAV × (1 – Exit Load, if any)
9.2.2. 242Exit loads shall be charged as a percentage of the NAV. Specifically,
the repurchase price shall be determined by subtracting the applicable
exit load, calculated as a percentage of the NAV, from the prevailing
238 Regulation 43 of SEBI (Mutual Funds) Regulations, 2026
239 SEBI/HO/IMD/DF2/CIR/P/2018/92 dated June 05, 2018
240 SEBI Circular No. MFD/CIR/08/514/2002 dated July 22, 2002, SEBI Circular No. MFD/CIR/11/16159/2002 dated August
22, 2002
241 SEBI Circular No. MFD/CIR/08/514/2002 dated July 22, 2002 & SEBI Circular No. SEBI/IMD/CIR No. 4/ 168230/09 dated
June 30, 2009
242 Refer SEBI email dated July 07, 2010
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NAV. 243The provisions of Regulation 44(4) applies on all open ended
mutual fund schemes wherever exit load is applicable.
9.2.3. All expenses and incomes accrued upto the date of valuation shall be
incorporated into the computation of net asset value. For this purpose,
while major expenses like management fees and other periodic
expenses shall be accrued on a day-to-day basis, other minor expenses
and income need not be so accrued, provided the non-accrual does not
affect the NAV calculations by more than 1%.
9.2.4. Any changes in securities and in the number of units be recorded in the
books of accounts no later than the first valuation date following the date
of the transaction. If this is not possible given the frequency of the NAV
disclosure, the recording may be delayed upto a period of 7 calendar
days following the date of the transaction, provided that as a result of
the non-recording, the NAV calculations shall not be affected by more
than 1%.
9.2.5. In case the NAV of a scheme differs by more than 1%, due to non-
recording of the transactions, the investors or scheme/s as the case may
be, shall be paid the difference in amount as follows:
(a) If the investors are allotted units at a price higher than NAV or are
given a price lower than NAV at the time of sale of their units, they
shall be paid the difference in amount by the scheme.
(b) If the investors are charged lower NAV at the time of purchase of
their units or are given higher NAV at the time of sale of their units,
asset management company shall pay the difference in amount to
the scheme. The AMC may recover the difference from the
investors.
9.3. Frequency of Computation and Disclosure of NAVs244 245
9.3.1. 246AMCs shall calculate NAV for each calendar day for their liquid fund
& overnight fund schemes and plans. For all other schemes, AMCs shall
calculate NAV for each business day.
9.3.2. Mutual Funds/ AMCs shall ensure that NAVs of all schemes are
prominently disclosed under a separate head on their respective
website and on the website of AMFI.
243 SEBI Circular No.SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021.
244 SEBI Circular No. IIMARP/MF/CIR/07/844/97 dated May 5, 1997, SEBI Circular No. MFD/CIR No.11/171/01 dated February
9, 2001, SEBI Circular No. MFD/CIR/13/087/2001 dated March 28, 2001; SEBI Circular No. SEBI/IMD/CIR No.5/63714/06
dated March 29, 2006, SEBI Circular No. SEBI/IMD/CIR No.5/96576/2007 dated June 25, 2007, SEBI Cir No. SEBI/IMD/Cir
No.12/147132/08 dated December 11,2008 and SEBI/HO/IMD/DF2/CIR/P/2018/92 dated June 05, 2018
245 SEBI Circular No. SEBI/IMD/CIR No.5/63714/06 dated March 29, 2006 and SEBI Circular No.
SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019.
246 SEBI Circular No. SEBI/IMD/CIR No. 11/78450/06 dated October 11, 2006
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9.3.3. Mutual Funds/ AMCs shall extend facility of sending latest available
NAVs to unit holders through SMS, upon receiving a specific request in
this regard.
9.3.4. 247The timeline for declaration of NAV for different category of schemes,
depending on investment objective and asset allocation of the scheme,
shall be as follows:
(Timelines in Business Days)
Sr. Type of Scheme Timeline
No
1 All Mutual Fund schemes except for ones 11 PM on T day
mentioned below
2 For schemes having exposure to ETCDs 9 AM on T+1 day
3 Fund of Fund (FOFs) Schemes 10 AM on T+1 day
4 Schemes including Index funds and ETFs 10 AM on T+1 day
investing atleast 80% of total assets in
permissible overseas investments
5 Such time as per
Schemes unable to disclose NAV as per
disclosure made in
timeline mentioned above due to inability in
SID along with
capturing same day valuation of underlying
reasons for such
investments
delayed disclosure
9.3.5. While complying with the timelines mentioned above, AMCs shall
ensure that NAV of schemes is disclosed based on the value of
underlying securities/ Funds as on the T day (i.e. date of investment in
MF units in India).
9.3.6. Delay, if any, in disclosure of NAVs beyond the timeline specified at
Paragraph9.3.4 above shall be explained in writing to AMFI and
reported in the quarterly CTR248. The reporting shall include the number
of days when mutual funds were not able to adhere to the above
mentioned time limit for uploading their NAVs on the AMFI website with
reasons thereof, the corrective action taken by the AMC to reduce the
number of such occurrences249.
247 SEBI Circular No. SEBI/HO/IMD/IMD-I POD2/P/CIR/2023/48 dated March 29, 2023
248 For format of CTR, please refer to Format No. 3B under the section on formats
249 SEBI Circular No. SEBI/IMD/CIR No.5/63714/06 dated March 29, 2006
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9.3.7. In case NAVs are not disclosed before the commencement of business
hours on the following day due to any reason, Mutual Funds shall issue
a press release giving reasons for the delay and explain when they
would be able to publish the NAVs250.
9.4. Guidelines for Cut off Timings for applicability of NAV of Mutual Fund
scheme(s) and/ or plan(s)251
9.4.1. Definitions:
(a) ‘Cut-off Timing’, in relation to an investor making an application to
a Mutual Fund for purchase or sale of units, shall mean, the outer
limit of timing within a particular day which is relevant for
determination of the NAV applicable for his transaction;
(b) ‘International scheme’ means a Mutual Fund scheme having
substantial investments in foreign securities valued as per time
zones other than Indian Standard Time zone;
(c) ‘Liquid fund & Overnight fund schemes and plans’ shall mean the
schemes and plans of a Mutual Fund as specified in the guidelines
issued by the Board in this regard252.
(d) ‘sweep’ transactions shall be treated as purchase transactions of
investors and ‘reverse sweep’ transactions shall be treated as sale
transactions of investors i.e. repurchase transactions of AMC.
(e) Similarly, ‘switch in’ transactions shall be treated as if it were
purchase transactions of investors and ‘switch out’ transactions
shall be treated as if they were sale transactions of investors i.e.
repurchase transaction for AMC.
(f) In case of ‘switch’ transactions from one scheme to another, the
allocation amount for ‘switch in’ shall be equal to the redemption
payouts from ‘switch out’ transaction.
9.4.2. Fixation of uniform Cut-off Timings:
(a) AMCs shall determine the cut-off timings for their mutual fund
schemes and plans in compliance with these provisions, and the
cut-off timings shall be applied uniformly to all investors.
(b) Funds for the entire amount of subscription/purchase of mutual
fund units as per the applications, including subscription amount
received through payment instruments, shall be credited to the
250 SEBI Circular No. SEBI/IMD/CIR No.5/63714/06 dated March 29, 2006.
251 SEBI Circular No. SEBI/IMD/CIR No. 11/78450/06 dated October 11, 2006.
252 SEBI Circular No.SEBI/IMD/CIR No.13/150975/09 dated January 19, 2009 & SEBI Circular No.
SEBI/HO/IMD/DF3/CIR/P/2017/114 dated October 06, 2017
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bank account of the respective scheme/plan expeditiously before
the cut-off time.
(c) AMCs shall compensate any loss occasioned to any investor or to
the scheme and/or plan on account of non-compliance with
Paragraph 9.4.2(b) above.
(d) The funds shall be available to the respective schemes for
utilization before the cut-off time without availing any credit facility
whether intra-day or otherwise.
(e) The NAV shall be assigned if both the application of purchase,
including application of switch in and sweep, is received and the
funds are credited to the respective scheme’s bank account and
are available for utilization by the scheme before the cut-off time.
(f) An AMC shall reckon only prospective NAV, in respect of all their
schemes and plans i.e. for other than liquid fund & overnight fund
schemes and plans.
9.4.3. Cut-off Timings for determining the applicable NAV253 254
(a) The following cut-off timings shall be observed by an AMC in
respect of purchase of units:
Applicable cut-off timing for purchase transactions (including purchase through
switch transactions)
Cut-off time for
credit of fund in
bank account of
Sr. Application respective Applicable
No Scheme type receipt time scheme Closing NAV
Day
immediately
Liquid and Overnight preceding the
Fund Schemes and Upto 1.30 p.m. on Upto 1:30 p.m. on day of receipt of
1 their plans the business day the business day application
Day
immediately
Liquid and Overnight preceding the
Fund Schemes and After 1:30 p.m. on Upto 1:30 p.m. on next business
2 their plans the business day the business day day
253 SEBI Circular No SEBI/IMD/DF/19/2010 dated November 26, 2010, SEBI Circular No SEBI/HO/IMD/DF2/CIR/P/2019/101
dated September 20, 2019
254 SEBI Circular No. SEBI/IMD/DF/19/2010 dated November 26, 2010
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Day
immediately
preceding the
day on which
Liquid and Overnight the funds are
Fund Schemes and After 1:30 on the available for
3 their plans On business day business day utilization
Closing NAV of the day on which the funds are available for
utilization shall be applicable irrespective of the size and time
All schemes and of receipt of such application255.
plans other than
Liquid and Overnight
Fund Schemes and For this purpose, the cut-off time for credit of funds to bank
4 their plans account of respective scheme shall be 3:00 pm.
(b) The following cut-off timings shall be observed by an AMC in
respect of sell of units by investors i.e. repurchase of units by
AMCs:
Applicable cutoff timing for sell transactions (including sell through switch
transactions)256
Sr.
No Scheme type Application receipt Applicable Closing NAV
1 Liquid and upto 3:00 p.m. of a business Day immediately preceding
Overnight Fund day the next business day
Schemes and their
upto 7:00 p.m. of a business
plans
day, in case application is
received through online mode
for overnight fund schemes
2 Liquid and after 3:00 pm of a business Next business day
Overnight Fund day
Schemes and their
plans
after 7:00 p.m. of a business
day, in case application is
received through online mode
for overnight fund schemes
255 SEBI Circular No. CIR/IMD/DF/21/2012 dated September 13, 2012 and SEBI Circular No. SEBI/HO/IMD/DF2/CIR/2020/175
dated September 17, 2020
256 SEBI Circular No. SEBI/HO/IMD/PoD2/P/CIR/2025/56 dated April 22, 2025
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3 All schemes and upto 3:00 p.m. on business Application day
plans other than day
Liquid and
Overnight Fund
Schemes and their
plans
4 All schemes and Any time on a non-business Next business day
plans other than day or anytime after 3:00
Liquid and p.m. of a business day
Overnight Fund
Schemes and their
plans
(c) The Cut off Timings for applicability of NAV shall be applicable to
all schemes and plans of Mutual Funds except:
(i) International schemes and
(ii) Transactions in Mutual Fund units undertaken on a
recognized Stock Exchange.
9.4.4. Intra-day NAV for transacting in units of ETFs directly with AMCs257
(a) For transactions in units of ETFs by Authorized Participants / large
investors directly with the AMCs, intra-day NAV based on the
executed price at which the securities representing the underlying
index or underlying commodity(ies) are purchased / sold, shall be
applicable.
(b) Appropriate disclosure in this regard shall be provided in the SID,
KIM and Common application form.
9.4.5. Business day: “Business Day” does not include a day on which the
Money Markets are closed or otherwise not accessible258.
9.4.6. Time Stamping
(a) Application from investors shall be received by Mutual Funds only
at official points of acceptance, addresses of which shall be
disclosed in the SID and on Mutual Funds’ websites.
(b) Cut off timings as prescribed under Paragraphs 9.4.3 of this Master
Circular shall apply with reference to the point of time at which the
applications are time stamped at such official points of acceptance.
257 SEBI Circular No. SEBI/HO/IMD/IMD-I/DOF5/P/CIR/2021/0606 dated July 30, 2021
258 SEBI Circular No. SEBI/HO/IMD/PoD2/P/CIR/2025/56 dated April 22, 2025
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(c) Time stamping machines at all official points of acceptance shall
be in compliance with the requirements mentioned in Paragraph
9.4.8 below.
9.4.7. Compliance Reporting
(a) Status of compliance with these guidelines shall be reported to the
Board in the CTR(s)259 of the AMC(s) and the HYTR260.
(b) The HYTR shall contain a declaration on whether the Trustees are
satisfied with the systems and procedures of the Mutual Fund
designed for the purpose of compliance with these Guidelines.
(c) Further, the substance of these Guidelines shall be disclosed to
investors in the SID or in any addendum thereto.
9.4.8. Requirements with respect to time stamping machines for applicability
of NAV261
(a) For every machine, running serial number shall be stamped from
the first number to the last number as per its capacity before
repetition of the cycle.
(b) Every application for purchase shall be stamped on the face and
the corresponding payment instrument shall be stamped on the
back indicating the date and time of receipt and running serial
number. The application and the payment instrument shall contain
the same serial number.
(c) Every application for redemption shall be stamped on the face
thereof and on the investor’s acknowledgment copy (or twice on
the application if no acknowledgment is issued) indicating the date
and time of receipt and running serial number.
(d) Different applications shall not be bunched together with the same
serial number.
(e) Blank papers shall not be time stamped. Genuine errors, if any,
shall be recorded with reasons and the corresponding applications
requests shall also be preserved.
(f) The time stamping machine shall have a tamper proof seal and the
ability to open the seal for maintenance or repairs shall be limited
to vendors or nominated persons of the AMCs, to be entered in a
proper record.
259 For CTR format, please refer Format No. 3B under the section on formats.
260 For Trustee report, please refer Format No. 3C under the section on formats
261 SEBI Circular No. SEBI/IMD/CIR No.11/78450/06 dated October 11, 2006
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(g) Breakage of seal and/or breakdown of the time stamping process
shall be duly recorded and reported to the Trustees.
(h) Every effort shall be made to ensure uninterrupted functioning of
the time stamping machine. In case of breakdown, the AMCs shall
take prompt action to rectify the situation. During the breakdown
period, AMCs shall adopt an alternative time stamping method that
has already been approved by the Board of the AMC and the
Trustee(s). An audit trail shall be available to check and ensure the
accuracy of the time stamping process during the said period.
(i) Any alternate mode of application that does not have any physical
or electronic trail shall be converted into a physical piece of
information and time stamped in accordance with these
Guidelines.
(j) AMCs shall maintain and preserve all applications/ requests, duly
time stamped as aforesaid, at least for a period of eight years262 to
be able to produce them as and when required by the Board or
auditors appointed by the Board.
262 Regulation 72(5) of SEBI (Mutual Funds) Regulations, 2026
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CHAPTER 10: VALUATION263
10.1. Definitions264
10.1.1. Traded Securities265
(a) A money market or debt security shall be considered as traded
when, on the date of valuation, there are trades (in marketable lots)
in that security on any recognized Stock Exchange or there are
trades reported (in marketable lots) on the trade reporting platform
of recognized stock exchanges or CCIL. In this regard, the
marketable lots have been defined by AMFI, in consultation with
the Board.
(b) When a security (other than Government Securities, money
market and debt securities) is traded on any Stock Exchange on
the valuation date or during a period of 30 calendar days prior to
the valuation date, the scrip shall be treated as a traded security.
10.1.2. Thinly Traded equity/ equity related securities:266
(a) When trading in an equity and/or equity related security (such as
convertible debentures, equity warrants etc.) in a month is both
less than Rs. 5 lakhs and the total volume (i.e. trades on all
recognized stock exchanges in India) is less than 50,000 shares,
the security shall be considered as thinly traded security and
valued accordingly.
(b) Where a Stock Exchange identifies the thinly traded securities by
applying the above parameters for the preceding calendar month
and publishes or provides the required information along with the
daily quotations, the same may be used by the Mutual Funds.
(c) If the shares are not listed on the Stock Exchanges which provide
such information, then AMCs shall make their own analysis in line
with the above criteria to check whether such securities are thinly
traded or not and then value them accordingly.
10.1.3. Below investment grade and default267:
(a) A money market or debt security shall be classified as “below
investment grade” if the long term rating of the security issued by
263 Refer SEBI letter No. SEBI/HO/OW/IMD-II/DOF3/P/2020/12151/1 dated July 31, 2020 read with Email dated August 12,
2020
264 SEBI Circular No. MFD/CIR/8/92/2000 dated September 18, 2000, SEBI Circular No. MFD/CIR/14/088/2001 dated March
28, 2001, SEBI Circular No. MFD/CIR/14/442/2002 dated February 20, 2002 and SEBI Circular No.
SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019.
265 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019, SEBI Circular No. MFD/CIR/8/92/2000
dated September 18, 2000 & SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019.
266 SEBI Circular No. MFD/CIR/14/088/2001 dated March 28, 2001.
267 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019
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a SEBI registered Credit Rating Agency (CRA) is below BBB- or if
the short term rating of the security is below A3.
(b) A money market or debt security shall be classified as “Default” if
the interest and / or principal amount has not been received, on
the day such amount was due or when such security has been
downgraded to “Default” grade by a CRA. In this respect, AMCs
shall promptly inform the valuation agencies and the CRAs, any
instance of non-receipt of payment of interest and / or principal
amount (part or full) in any security.
10.2. Valuation of Securities268
10.2.1. Traded Securities (other than money market and debt securities):
(a) The securities shall be valued at the last quoted closing price on
the stock exchange.
(b) When the securities are traded on more than one recognised stock
exchange, the securities shall be valued at the last quoted closing
price on the stock exchange where the security is principally
traded. It would be left to the AMC to select the appropriate stock
exchange, but the reasons for the selection shall be recorded in
writing. There shall, however, be no objection for all scrips being
valued at the prices quoted on the stock exchange where a
majority in value of the investments are principally traded.
(c) Once a stock exchange has been selected for valuation of a
particular security, reasons for change of the exchange shall be
recorded in writing by the AMC.
(d) When on a particular valuation day, a security has not been traded
on the selected stock exchange, the value at which it is traded on
another stock exchange may be used.
(e) When a security is not traded on any stock exchange on a
particular valuation day, the value at which it was traded on the
selected stock exchange or any other stock exchange, as the case
may be, on the earliest previous day may be used provided such
date is not more than 30 calendar days prior to the valuation date.
10.2.2. Non-Traded /and/or Thinly Traded Equity Securities:269
268 SEBI Circular No. MFD/CIR/14/442/2002 dated February 20, 2002 and SEBI Circular No.
SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019
269 SEBI Circular No. MFD/CIR/8/92/2000 dated September 18, 2000 and SEBI Circular No.
SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019
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(a) When a security is not traded on any stock exchange for a period
of 30 calendar days prior to the valuation date, the scrip shall be
treated as a ‘non-traded’ scrip.
(b) Non-traded securities shall be valued “in-good faith” by the AMC
on the basis of appropriate valuation methods based on the
principles approved by the Board of the AMC. Such decision of the
Board of the AMC shall be documented in the Board minutes and
the supporting data in respect of each security so valued shall be
preserved. The methods used to arrive at values “in-good faith”
shall be periodically reviewed by the trustees and reported upon
by the auditors as “fair and reasonable” in their report on the
annual accounts of the fund. For the purpose of valuation of non-
traded securities, the following principles shall be adopted:
(i) equity instruments shall generally be valued on the basis of
capitalization of earnings solely or in combination with the net
asset value, using for the purposes of capitalization, the price
or earning ratios of comparable traded securities and with an
appropriate discount for lower liquidity;
(ii) in respect of convertible debentures and bonds, the non-
convertible and convertible components shall be valued
separately. The non-convertible component shall be valued
on the same basis as would be applicable to a debt
instrument. The convertible component shall be valued on
the same basis as would be applicable to an equity
instrument. If, after conversion the resultant equity instrument
would be traded pari-passu with an existing instrument which
is traded, the value of the latter instrument can be adopted
after an appropriate discount of the non-tradability of the
instrument during the period preceding the conversion while
valuing such instruments, the fact whether the conversion is
optional shall also be factored in;
(iii) in respect of warrants to subscribe for shares attached to
instruments, the warrants can be valued at the value of the
share which would be obtained on exercise of the warrant as
reduced by the amount which would be payable on exercise
of the warrant. A discount similar to the discount to be
determined in respect of convertible debentures as referred
to in Paragraph (ii) above shall be deducted to account for
the period which must elapse before the warrant can be
exercised;
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(c) AMCs shall value non traded and/or thinly traded securities “in
good faith” based on the Valuation norms prescribed below:
(d) Based on the latest available Balance Sheet, Net Worth shall be
calculated as follows:
(i) Net Worth per share = [Share Capital+ Reserves (excluding
Revaluation Reserves) – Miscellaneous expenditure and
Debit Balance in Profit and Loss Account] / Number of Paid
up Shares.
(ii) Average Capitalization rate (P/E ratio) for the industry based
upon either BSE or NSE data (which shall be followed
consistently and changes, if any, noted with proper
justification thereof) shall be taken and discounted by 75%
i.e. only 25%. Of the industry average P/E shall be taken as
Capitalization rate (P/E ratio). Earnings per share (EPS) of
the latest audited annual accounts shall be considered for
this purpose.
(iii) The value as per the Net Worth value per share and the
capital earning value calculated as above shall be averaged
and further discounted by 10% for illiquidity so as to arrive at
the fair value per share.
(iv) In case the EPS is negative, EPS value for that year shall be
taken as zero for arriving at capitalised earning.
(v) In case where the latest Balance Sheet of the company is not
available within nine months from the close of the year,
unless the accounting year is changed, the shares of such
companies shall be valued at zero.
(vi) In case an individual security accounts for more than 5% of
the total assets of the scheme, an independent valuer shall
be appointed for the valuation of the said security. To
determine if a security accounts for more than 5% of the total
assets of the scheme, it shall be valued by the procedure
above and the proportion which it bears to the total net assets
of the scheme to which it belongs shall be compared on the
date of valuation.
(vii) In case trading in an equity security is suspended up to 30
calendar days, then the last traded price shall be considered
for valuation of that security. If an equity security is
suspended for more than 30 calendar days, then the AMC(s)
or Trustees shall decide the valuation norms to be followed
and such norms shall be documented and recorded.
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(e) In respect of rights, until they are traded, the value of the “rights”
shares shall be calculated as:
Where the rights are not treated pari-passu with the existing
shares, suitable adjustment shall be made to the value of rights.
Where it is decided not to subscribe to the rights but to renounce
them and renunciations are being traded, the rights can be valued
at the renunciation value.
10.2.3. Debt and Money Market Securities270
(a) Valuation:
(i) All money market and debt securities including floating rate
securities shall be valued at average of security level prices
obtained from valuation agencies.
(ii) In case security level prices given by valuation agencies are
not available for a new security (which is currently not held
by any Mutual Fund), then such security may be valued at
purchase yield/price on the date of allotment / purchase.
(iii) The AMC shall take into consideration prices of trades of
same security or similar security reported at all available
public platforms.
(b) Methodology271: For arriving at security level pricing, a waterfall
approach shall be followed for the valuation of money market and
debt securities.
(i) AMFI shall ensure that valuation agencies have a
documented waterfall approach for valuation of money
market and debt securities. The said waterfall approach has
been documented in consultation with the Board.
270 SEBI Circular No. SEBI/HO/IMD/IMD-I PoD-1/P/CIR/2024/163 dated November 26, 2024, Refer SEBI letter No.
SEBI/HO/IMD/DF4/OW/P/2019/24760 dated September 20, 2019, SEBI Circular No. SEBI/IMD/CIR No.16/ 193388/2010
dated February 02, 2010 Cir/IMD/DF/4/2010 dated June 21, 2010, SEBI Circular No. Cir/IMD/DF/6/2012 dated February 28,
2012, SEBI/HO/IMD/DF4/CIR/P/2019/41 dated March 22, 2019 and SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/102
dated September 24, 2019, SEBI Circular No. SEBI/IMD/CIR No.16/ 193388/2010 dated February 02, 2010,
Cir/IMD/DF/4/2010 dated June 21, 2010, SEBI Circular No. Cir/IMD/DF/6/2012 dated February 28, 2012,
SEBI/HO/IMD/DF4/CIR/P/2019/41 dated March 22, 2019 and SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/102 dated
September 24, 2019, SEBI Circular No. SEBI/HO/IMD/IMD-I PoD-1/P/CIR/2024/163 dated November 26, 2024
271 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019, Refer SEBI letter No.
SEBI/HO/IMD/DF4/OW/P/2019/29520 dated November 07, 2019
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(ii) The following broad principles shall be adopted as part of the
aforesaid waterfall approach, for arriving at the security level
prices:
(I) All traded securities shall be valued on the basis of
traded yields, subject to identification of outlier trades
by the valuation agencies.
(II) Volume Weighted Average Yield (VWAY) for trades in
the last one hour of trading shall be used as the basis
for valuation of Government Securities (including T-
bills). Valuation of all other money market and debt
securities (including Government securities not traded
in last one hour) shall be done on the basis of VWAY of
all trades during the day.
(III) An indicative list of exceptional events shall form part of
the documented waterfall approach mentioned above.
In case of any exceptional events on a day, only VWAY
of trades post such event may be considered for
valuation. Further, all exceptional events along-with
valuation carried out on such dates shall be
documented with adequate justification.
(IV) All trades on stock exchanges and trades reported on
trade reporting platforms till end of the trade reporting
time (excluding Inter-scheme transfers), shall be
considered for valuation on that day. Towards this end,
the timing for disclosure of NAV on website of
respective AMCs and AMFI shall be as per Paragraph
9.3.4 of this Master Circular.
(V) Considering the importance of polling in the valuation
process, guidelines have been issued by AMFI on
polling by valuation agencies and on the responsibilities
of Mutual Funds in the polling process, as part of the
aforesaid waterfall approach. These guidelines inter-
alia includes the following:
(A) Valuation agencies shall identify the Mutual Funds
which shall participate in the polling process on a
particular day, taking into account factors such as
diversification of poll submitters and portfolio
holding of the Mutual Funds. Mutual Funds which
are identified by the valuation agencies shall
necessarily participate in the polling process.
However, in case any Mutual Fund does not
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participate in the polling process, detailed reason
for the same shall be recorded and made available
during inspections by the Board.
(B) The minimum number of polls to be considered for
valuation along-with the operational modalities of
polling, shall be specified.
(C) AMCs shall have a written policy, approved by the
Board of AMC and Trustees, on governance of the
polling process. The aforesaid policy shall include
measures for mitigation of potential conflicts of
interest in the polling process and shall identify
senior officials responsible for polling.
(D) AMCs shall ensure that participation in the polling
process is not mis-used to inappropriately
influence the valuation of securities. The officials
of the AMC who are responsible for polling in
terms of Paragraph (C) above, shall also be
personally liable for any mis-use of the polling
process.
(E) AMCs shall maintain an audit trail for all polls
submitted to valuation agencies.
(iii) The aforesaid waterfall approach shall form part of the
valuation policy of individual AMCs which shall be uploaded
on their respective websites. AMFI shall ensure that the said
waterfall approach is also available on the website of the
valuation agencies.
(c) Deviation from valuation guidelines: 272
(i) In case an AMC decides to deviate from the valuation price
given by the valuation agencies, the detailed rationale for
each instance of deviation shall be recorded by the AMC.
(ii) The rationale for deviation along-with details such as
information about the security (ISIN, issuer name, rating etc.),
price at which the security was valued vis-a-vis the price as
per the valuation agencies and the impact of such deviation
on scheme NAV (in amount and percentage terms) shall be
reported to the Board of AMC and Trustees.
(iii) The rationale for deviation along-with details as mentioned
under Paragraph (ii) above shall be disclosed immediately
272 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019
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and prominently, under a separate head on the website of
AMC.
(iv) Further, while disclosing the total number of instances of
deviation in the monthly portfolio statements, AMCs shall also
provide the exact link to their website for accessing the
information mentioned at Paragraph (iii) above.
(d) Valuation of money market and debt securities which are rated
below investment grade273:
(i) All money market and debt securities which are rated below
investment grade shall be valued at the price provided by
valuation agencies.
(ii) Till such time the valuation agencies compute the valuation
of money market and debt securities classified as below
investment grade, such securities shall be valued on the
basis of indicative haircuts provided by these agencies.
These indicative haircuts shall be applied on the date of credit
event i.e. migration of the security to sub-investment grade
and shall continue till the valuation agencies compute the
valuation price of such securities. Further, these haircuts
shall be updated and refined, as and when there is availability
of material information which impacts the haircuts.
(iii) Consideration of traded price for valuation:
(I) In case of trades during the interim period between date
of credit event and receipt of valuation price from
valuation agencies, AMCs shall consider such traded
price for valuation if it is lower than the price post
standard haircut. The said traded price shall be
considered for valuation till the valuation price is
determined by the valuation agencies.
(II) In case of trades after the valuation price is computed
by the valuation agencies as referred above and where
the traded price is lower than such computed price,
such traded price shall be considered for the purpose of
valuation and the valuation price may be revised
accordingly.
(III) The trades referred above shall be of a minimum size
as determined by valuation agencies.
273 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019
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(iv) AMCs may deviate from the indicative haircuts and/or the
valuation price for money market and debt securities rated
below investment grade provided by the valuation agencies
subject to the following:
(I) The detailed rationale for deviation from the price post
haircuts or the price provided by the valuation agencies
shall be recorded by the AMC.
(II) The rationale for deviation along-with details such as
information about the security (ISIN, issuer name, rating
etc.), price at which the security was valued vis-a-vis the
price post haircuts or the average of the price provided
by the valuation agencies (as applicable) and the
impact of such deviation on scheme NAV (in amount
and percentage terms) shall be reported to the Board of
AMC and Trustees.
(III) The rationale for deviation along-with details as
mentioned at Paragraph (II) above shall also be
disclosed to investors. In this regard, all AMCs shall
immediately disclose instances of deviations under a
separate head on their website. Further, the total
number of such instances shall also be disclosed in the
monthly portfolio statements for the relevant period
along-with an exact link to the website wherein the
details of all such instances of deviation are available.
(v) Treatment of accrued interest, future interest accrual and
future recovery274:
(I) The indicative haircut that has been applied to the
principal shall be applied to any accrued interest.
(II) In case of securities classified as below investment
grade but not default, interest accrual may continue with
the same haircut applied to the principal. In case of
securities classified as default, no further interest
accrual shall be made.
(vi) The following shall be the treatment of how any future
recovery shall be accounted for in terms of principal or
interest:
274 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019. Further, the Guidelines for Identification
and Provisioning for Non-Performing Assets (Debt Securities) have been deleted vide SEBI Circular No. SEBI/HO/IMD/DF4/
CIR/P/2019/102 dated September 24, 2019.
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(I) Any recovery shall first be adjusted against the
outstanding interest recognized in the NAV and any
balance shall be adjusted against the value of principal
recognized in the NAV.
(II) Any recovery in excess of the carried value (i.e. the
value recognized in NAV) shall then be applied first
towards amount of interest written off and then towards
amount of principal written off.
10.3. Valuation of securities with Put/Call Options275:
10.3.1. The option embedded securities shall be valued as follows:
(a) Securities with call option
(i) The securities with call option shall be valued at the lower of
the value as obtained by valuing the security to final maturity
date and call option date. In case there are multiple call
options, the lowest value obtained by valuing to the various
call dates and valuing to the maturity date shall be taken as
the value of the instrument.
(ii) In line with the recommendation of NFRA, since market
practice for AT-1 bonds has been observed to usually trade
at or quote prices closer to Yield to Call (YTC), AT-1 Bonds
shall be valued on Yield to Call basis (adjusted with
appropriate risk spreads), consistent with the principles of
market-based measurement under Ind AS 113276.
(iii) NFRA, in its report, has further stated that the above
recommendation on YTC methodology is confined only to the
interpretation of Ind AS 113 with reference to the valuation of
AT-1 bonds and the issue of deemed maturity date for other
purposes is outside NFRA’s remit.
(b) Securities with Put option
(i) The securities with put option shall be valued at the higher of
the value as obtained by valuing the security to final maturity
date and put option date. In case there are multiple put
options, the highest value obtained by valuing to the various
put dates and valuing to the maturity date shall be taken as
the value of the instruments.
275 SEBI Circular No. MFD/CIR/8/92/2000 dated September 18, 2000 and SEBI Circular No.
SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019
276 SEBI Circular No. SEBI/HO/IMD/PoD1/CIR/P/2024/106 dated August 05, 2024
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(c) Securities with both Put and Call option on the same day
(i) Only securities with put / call options on the same day and
having the same put and call option price, shall be deemed
to mature on such put / call date and shall be valued
accordingly. In all other cases, the cash flow of each put / call
option shall be evaluated and the security shall be valued on
the following basis:
(I) Identify a ‘Put Trigger Date’, a date on which ‘price to
put option’ is the highest when compared with price to
other put options and maturity price.
(II) Identify a ‘Call Trigger Date’, a date on which ‘price to
call option’ is the lowest when compared with price to
other call options and maturity price.
(III) In case no Put Trigger Date or Call Trigger Date
(‘Trigger Date”) is available, then valuation shall be
done to maturity price. In case one Trigger Date is
available, then valuation shall be done as to the said
Trigger Date. In case both Trigger Dates are available,
then valuation shall be done to the earliest date.
10.3.2. If a put option is not exercised by a Mutual Fund while exercising such
put option would have been in favour of the scheme, the justification for
not exercising the put option shall be provided to the Board of AMC and
Trustees.
10.3.3. In respect of valuation of securities with multiple put options present ab-
initio wherein put option is factored into valuation of the security by the
valuation agency, if the put option is not exercised by a Mutual Fund,
while exercising the put option would have been in favour of the scheme;
(a) A justification for not exercising the put option shall be provided by
the Mutual Fund to the Valuation Agencies, Board of AMC and
Trustees on or before the last date of the notice period.
(b) The Valuation Agencies shall not take into account the remaining
put options for the purpose of valuation of the security.
10.3.4. The put option shall be considered as ‘in favour of the scheme’ if the
yield of the valuation price ignoring the put option under evaluation is
more than the contractual yield/coupon rate by 30 basis points.
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10.4. Valuation of Perpetual Bonds277:
10.4.1. Valuation of bonds with call and/or put options shall be in line with
Paragraph 10.3 above irrespective of the nature of issuer.
10.4.2. The deemed maturity of all perpetual bonds shall be treated as 100
years from the date of issuance of the bond for the purpose of valuation.
10.4.3. AMFI has issued detailed guidelines with respect to valuation of bonds
issued under Basel III framework.
10.5. Valuation of Government Securities278
10.5.1. Irrespective of the residual maturity, Government Securities (including
T-bills) shall be valued on the basis of security level prices obtained from
valuation agencies.
10.6. Valuation of other money market / debt securities, short-term deposits
with banks (pending deployment) and OTC derivatives279:
10.6.1. The valuation of bills purchased under rediscounting scheme shall be
as per the guidelines mentioned for valuation of money market
instruments, at Paragraphs 10.2.3 above, as the case may be.
10.6.2. Investments in short-term deposits with banks (pending deployment)
shall be valued on cost plus accrual basis280.
10.6.3. In order to have uniformity in valuation methodology, prices for all OTC
derivatives and market linked debentures shall be obtained from
valuation agencies.
10.7. Illiquid Securities
10.7.1. Aggregate value of “illiquid securities” under a scheme, which are
defined as non-traded, thinly traded and unlisted equity shares, shall not
exceed 15% of the total assets of the scheme and any illiquid securities
held above 15% of the total assets shall be assigned zero value.
10.7.2. All AMCs shall disclose the scheme wise total illiquid securities in value
and percentage of the net assets while disclosing monthly portfolios to
the unit holders. In the list of investments, an asterisk mark shall be
given against all such investments which are recognised as illiquid
securities.
277 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2021/032 dated March 10, 2021 and SEBI Circular No.
SEBI/HO/IMD/DF4/CIR/P/2021/034 dated March 22, 2021, Refer SEBI letter No. IMD/DoF4/OW/P/6697/1 dated March 22,
2021
278 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/102 dated February 20, 2002, SEBI Circular No.
SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019
279 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019
280 SEBI Circular No. SEBI/HO/IMD/IMD-I PoD-1/P/CIR/2024/163 dated November 26, 2024
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10.7.3. AMC of Mutual Fund shall not be allowed to transfer illiquid securities
among their schemes.
10.8. Investment in Unlisted Equity Shares281
10.8.1. Unlisted equity shares of a company shall be valued "in good faith"
based on the valuation norms prescribed below:
(a) Based on the latest available audited balance sheet, Net Worth
shall be calculated as the lower of point (1) and (2) below:
(i) Net Worth per share = [Share Capital + Free Reserves
(excluding revaluation reserves) - Miscellaneous expenditure
not written off or deferred revenue expenditure, intangible
assets and accumulated losses] / Number of Paid up Shares.
(ii) After taking into account the outstanding warrants and
options, Net Worth per share shall again be calculated and
shall be = [Share Capital + consideration on exercise of
Option and/or Warrants received/receivable by the Company
+ Free Reserves (excluding Revaluation Reserves) -
Miscellaneous expenditure not written off or deferred
revenue expenditure, intangible assets and accumulated
losses] / Number of Paid up Shares plus Number of Shares
that would be obtained on conversion and/or exercise of
Outstanding Warrants and Options.
(b) Average capitalisation rate (P/E ratio) for the industry based upon
either BSE or NSE data (which shall be followed consistently and
changes, if any, noted with proper justification thereof) shall be
taken and discounted by 75 per cent. i.e. only 25 per cent of the
industry average P/E shall be taken as capitalisation rate (P/E
ratio). Earnings per share (EPS) of the latest audited annual
accounts shall be considered for this purpose.
(c) The value as per the Net Worth value per share at Paragraph (a)
above and the capital earning value calculated at Paragraph (b)
above shall be averaged and further discounted by 15 per cent for
illiquidity so as to arrive at the fair value per share.
10.8.2. The above valuation methodology shall be subject to the following
conditions:
(a) All calculations shall be based on audited accounts.
281 SEBI Circular No. MFD/CIR/03/526/2002 dated May 9, 2002
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(b) If the latest Balance Sheet of the company is not available within
nine months from the close of the year, unless the accounting year
is changed, the shares of such companies shall be valued at zero.
(c) If the Net Worth of the company is negative, the share shall be
marked down to zero.
(d) In case the EPS is negative, EPS value for that year shall be taken
as zero for arriving at capitalised earning.
(e) In case an individual security accounts for more than 5% of the
total assets of the scheme, an independent valuer shall be
appointed for the valuation of the said security. To determine if a
security accounts for more than 5% of the total assets of the
scheme, it shall be valued in accordance with the procedure as
mentioned above on the date of valuation.
10.8.3. At the discretion of the AMCs and with the approval of the Trustees,
unlisted equity shares may be valued at a price lower than the value
derived using the aforesaid methodology.
10.8.4. Due Diligence:
(a) Mutual Funds shall not make Investment in unlisted equity shares
at a price higher than the price obtained by using the aforesaid
methodology. However, this restriction is not applicable for
investment made in the IPOs of the companies or firm allotment in
public issues where all the regulatory requirements and formalities
pertaining to public issues have been complied with by the
companies and where the Mutual Funds are required to pay just
before the date of public issue.
(b) The Board of the AMC and Board of Trustees shall lay down the
parameters for investing in unlisted equity shares. They shall pay
specific attention as to whether due diligence was exercised while
making such investments and shall review the performance of
such investments in their periodical meetings282.
10.8.5. Reporting of Compliance:
(a) Compliance with these guidelines shall be reported by the AMCs
and Trustees in their CTRs283 and HYTRs284 filed with the Board.
10.9. Valuation of Gold and Silver285:
282 SEBI Circular No. MFD/CIR/6/73/2000 dated July 27, 2000.
283 SEBI Circular No. MFD/CIR/6/73/2000 dated July 27, 2000.
284 For Half Yearly Reports, please refer to Format No. 3C under the section on formats
285 SEBI Circular No. HO/(68)2026-IMD-POD-2/I/5780/2026 dated February 26, 2026
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10.9.1. The mutual funds shall value physical Gold and Silver by using the
polled spot prices published by the recognized stock exchanges which
are used for settlement of physically delivered Gold and Silver
derivatives contracts. The spot polling mechanism shall comply with
the spot polling guidelines as specified by the Board from time to time.
10.9.2. In this regard, AMFI in consultation with the Board has prescribed a
uniform policy.
10.10. Valuation by Fund of Funds (FoFs) investing in ETFs286
10.10.1. The closing price of the units of ETFs on Stock Exchange shall be used
for valuation by FoFs investing in such ETFs.
10.11. Valuation of securities not covered under the current valuation policy287:
10.11.1. In case the securities purchased by AMCs do not fall within the current
framework of the valuation of securities then such AMCs shall report
immediately to AMFI regarding the same. Further, at the time of
investment AMCs shall ensure that the total exposure in such securities
does not exceed 5% of the total AUM of the scheme.
10.11.2. AMFI has been advised that the valuation agencies shall ensure that the
valuation of such securities gets covered in the valuation framework
within six weeks from the date of receipt of such intimation from the
mutual fund.
10.11.3. In the interim period, till AMFI makes provisions to cover such securities
in the valuation of securities framework, the AMCs shall value such
securities using their proprietary model which has been approved by
their independent trustees and the statutory auditors.
10.12. Use of own trade for valuation288
10.12.1. Mutual Funds shall not use their own trades for valuation of debt and
money market securities and for Inter-scheme transfers.
10.13. Inter-scheme transfers (IST)289:
10.13.1. AMCs shall seek prices for IST of any money market or debt security
(irrespective of maturity), from the valuation agencies.
10.13.2. AMFI, in consultation with valuation agencies shall decide a turn-
around-time (TAT), within which IST prices shall be provided by the
agencies.
286 SEBI Circular No.: SEBI/HO/IMD/DOF2/P/CIR/2022/69 dated May 23, 2022
287 SEBI/IMD/CIR No.16/193388/2010 dated February 02, 2010 and Cir/IMD/DF/4/2010 dated June 21, 2010
288 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019
289 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019
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10.13.3. If prices from the valuation agencies are received within the pre-agreed
TAT, an average of the prices so received shall be used for IST pricing.
10.13.4. If price from only one valuation agency is received within the agreed
TAT, that price may be used for IST pricing.
10.13.5. If prices are not received from any of the valuation agencies within the
agreed TAT, AMCs may determine the price for the IST, in accordance
with Paragraph 13.19.1 of this Master Circular.
10.14. Changes in Terms of Investment 290
10.14.1. While making any change to terms of an investment, AMCs shall adhere
to the following conditions:
(a) Any changes to the terms of investment, including extension in the
maturity of a money market or debt security, shall be reported to
valuation agencies and SEBI registered Credit Rating Agencies
(CRAs) immediately, along-with reasons for such changes. 291
(b) Any extension in the maturity of a money market or debt security
shall result in the security being treated as “Default”, for the
purpose of valuation.
(c) If the maturity date of a money market or debt security is shortened
and then subsequently extended, the security shall be treated as
“Default” for the purpose of valuation.
(d) Any put option inserted subsequent to the issuance of the security
shall not be considered for the purpose of valuation and original
terms of the issue shall be considered for valuation.
10.15. Dissemination of information:
10.15.1. All AMCs shall provide transaction details (including inter scheme
transfers) of money market and debt securities on daily basis to the
agency entrusted for providing the benchmark yield/ matrix of spread
over risk free benchmark yield. Submission of data would help in daily
matrix generation and would improve uniformity and accuracy of
valuation in the mutual funds industry.
10.15.2. The AMCs shall also disclose all details of debt and money market
securities transacted (including inter scheme transfers) in its schemes
portfolio on its website and the same shall be forwarded to AMFI for
consolidation and dissemination as per Format No. 3J. These
disclosures shall be made settlement date wise on daily basis with a
time lag of 15 calendar days. The above disclosure shall be in a
290 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019
291 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/126 dated November 06, 2019
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comparable, downloadable (spreadsheet) and machine readable
format292.
10.15.3. All AMCs shall provide transaction details of various types of debt
securities like NCDs, Mibor linked floaters and CPs on daily basis in the
prescribed format enclosed at Format No. 3K to the agency
recommended by AMFI293.
10.16. Valuation and disclosure of upfront fees294:
10.16.1. Guidelines for valuation of any upfront fee (or any other consideration,
by whatever name called) received in a Mutual Fund scheme, has been
issued by AMFI, in consultation with the Board.
10.17. Guidelines for investments in partly paid debentures295
10.17.1. Guidelines for investment by Mutual Funds in partly paid debentures has
been issued by AMFI, in consultation the Board.
10.18. Guidelines to be issued by AMFI 296:
10.18.1. The guidelines to be issued by AMFI, in consultation with SEBI under
Paragraphs 10.1.1(a), 10.2.3(b)(i), 10.4.3, 10.16 and 10.17 above shall
necessarily be followed by all Mutual Funds / AMCs. Any future changes
to these guidelines shall be made by AMFI in consultation with the
Board, prior to implementation.
10.19. Consistency
10.19.1. All AMCs shall ensure that similar securities held under its various
schemes are valued consistently.
292 SEBI Circular No. Cir/IMD/DF/6/2012 dated February 28, 2012 and SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2020/163
dated September 01, 2020
293 SEBI Circular No. MFD/CIR.No 23 / 066 /2003 dated March 7,2003
294 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019, Refer SEBI letter No.
SEBI/HO/IMD/DF4/OW/P/2019/29520 dated November 07, 2019
295 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019, Refer SEBI letter No.
SEBI/HO/IMD/DF4/OW/P/2019/29520 dated November 07, 2019
296 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019
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CHAPTER 11: LOADS, FEES, CHARGES AND EXPENSES
11.1. Limits on fees and expenses charged to schemes297
11.1.1. AMC of Mutual Fund may charge certain expenses to a scheme, as
specified under Regulations. Apart from these expenses, any other
expense as may be approved by the Board under Regulation 66(5)(o)
may also be charged to the Mutual Fund schemes. Other expenses
directly attributable to a scheme may be charged with the approval of
trustees within the overall limits as provided in the Regulation 66(7).
11.2. Disclosure of Total Expense Ratio (TER) 298
11.2.1. Trustees and AMCs are advised to take proper care and exercise due
diligence to ensure that all expenses charged to the scheme are clearly
identified and disclosed in the offer document and they are strictly in
conformity with the MF Regulations299.
11.2.2. AMCs shall prominently disclose on a daily basis, the TER (scheme-
wise, date-wise) of all schemes except infrastructure debt fund (IDF)
schemes under a separate head –“Total Expense Ratio of Mutual Fund
Schemes” on their website and on the website of AMFI in a
downloadable spreadsheet format, as per Format No. 7E.
11.2.3. Each item of expenditure accounting for more than 10% of total
expenditure shall be disclosed in the accounts or the notes thereto of
the schemes.
11.2.4. The disclosure shall strictly be in the format given at Format No. 7E and
shall be in a downloadable spreadsheet and a machine readable format.
The formula for TER shall be as follows:
(a) TER = Base Expense Ratio (BER) + Brokerage Cost + Transaction
Cost incurred for the purpose of execution of trade + Statutory
levies (including GST)
11.3. Transparency in expenses charged to investors300
11.3.1. The following expenses shall not be charged to the schemes of Mutual
Funds301:
297 SEBI Circular No. IIMARP/MF/CIR/01/428/97 dated February 28, 1997, SEBI Circular No. IIMARP/MF/CIR/07/826/98 dated
April 15, 1998, SEBI Circular No. MFD/CIR/9/120/2000 dated November 24, 2000, Refer SEBI letter No.
SEBI/IMD/DF2/OW/P/2020/11099/1 dated June 29, 2020
298 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2018/18 dated February 5, 2018, SEBI/HO/IMD/DF2/CIR/P/2018/91 dated
June 05, 2018 and SEBI/HO/IMD/DF2/CIR/P/2019/42 dated March 25, 2019, Refer SEBI letter No.
SEBI/HO/IMD/DF2/OW/P/2018/13813/1 dated May 09, 2018, Refer SEBI letter No. SEBI/HO/IMD/DF2/OW/P/2018/22825/1
dated August 13, 2018
299 SEBI Circular No. IIMARP/MF/CIR/01/428/97 dated February 28, 1997
300 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2018/137 dated October 22, 2018. Refer SEBI letter No.
SEBI/HO/IMD/SEC4/OW/P/2024/1451/1 dated January 11, 2024
301 SEBI Circular No. MFD/CIR/9/120/2000 dated November 24, 2000
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(a) Penalties and fines for infraction of laws.
(b) Interest on delayed payment to the unit holders.
(c) Legal, marketing, publication and other general expenses not
attributable to any scheme(s).
(d) Fund Accounting Fees.
(e) Expenses on investment management/general management.
(f) Expenses on general administration, corporate advertising and
infrastructure costs.
(g) Depreciation on fixed assets and software development expenses.
(h) Such other costs as may be prohibited by the Board.
11.3.2. The expenditure and/or fee payable by Mutual Funds to the Depositories
may either be capitalized or included as part of recurring expenditure
within the limits prescribed under Regulation 66(7).
11.3.3. All scheme related expenses including commission paid to distributors,
by whatever name it may be called and in whatever manner it may be
paid, shall necessarily be paid from the scheme only within the
regulatory limits and not from the books of the AMC, its associate,
sponsor, trustee or any other entity through any route.
Provided302 that the expenses that are very small in value but high in
volume may be paid out of AMC’s books. Such expenses can be paid
out of AMC’s books at actuals or not exceeding 2 bps of respective
scheme AUM, whichever is lower. A list of such miscellaneous
expenses has been provided by AMFI in consultation with the Board.
Such expenses incurred by AMC shall be properly recorded in the books
of account of AMC and audited at year end.
11.3.4. Training sessions and programmes conducted for distributors shall not
be misused for providing any reward or non-cash incentive to the
distributors.
11.3.5. All fees and expenses charged in a direct plan (in percentage terms)
under various heads including the investment and advisory fee shall not
exceed the fees and expenses charged under such heads in a regular
plan.
11.4. Change in Base Expense Ratio
11.4.1. Any change in the BER in comparison to previous base BER charged to
any scheme/plan shall be communicated to investors of the
302 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2019/42 dated March 25, 2019
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scheme/plan through notice via email or SMS at least three working
days prior to effecting such change. (For example, if changed BER is to
be effective from January 8, 2026, then notice shall be given latest by
January 2, 2026, considering at least three working days prior to
effective date). Further, the notice of change in BER shall be updated in
the aforesaid section of website at least three working days prior to
effecting such change.
11.4.2. Provided that any change in BER in a mutual fund scheme due to
change in AUM or any decrease in BER in a mutual fund scheme due
to various other regulatory requirements shall not require issuance of
any prior notice to the investors.
11.4.3. The above change in the BER in comparison to previous BER charged
to the scheme shall be intimated to the Board of AMC along with the
rationale recorded in writing.
11.4.4. The changes in BER shall also be placed before the Trustees on
quarterly basis along with rationale for such changes.
11.5. Distribution Commission
11.5.1. MFs/ AMCs shall adopt full trail model of commission in all schemes,
without payment of any upfront commission or upfronting of any trail
commission, directly or indirectly, in cash or kind, through sponsorships,
or any other route. However, upfronting of trail commission will be
allowed only in case of inflows through Systematic Investment Plans
(SIPs).
11.5.2. In respect of inflows through SIPs into MF schemes, a carve out has
been considered only for new investors to the MF industry (to be
identified based on PAN). The upfronting of trail commissions, based on
SIP inflows, shall be up to 1% payable yearly in advance, for a maximum
period of three years.
11.5.3. The payment of upfront trail commission would be subject to the
following303:
(a) The upfronting of trail commission may be for SIP of upto Rs. 3,000
per month, per scheme, for an investor who is investing for the first
time in Mutual Fund schemes.
(b) For a new investor, as identified above, only the first SIP(s)
purchased by the investor shall be eligible for up-fronting. In this
regard, if multiple SIP(s) are purchased on different dates, the
303 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2019/42 dated March 25, 2019
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SIP(s) in respect of which the instalment starts on the earliest date
shall be considered for upfronting.
(c) The upfront trail commission shall be paid from AMC’s books.
(d) The said commission shall be amortized on daily basis to the
scheme over the period for which the payment has been made. A
complete audit trail of upfronting of trail commissions from the
AMC’s books and amortization of the same to scheme(s)
thereafter shall be made available for inspection.
(e) The said commission should be charged to the scheme as
‘commissions’ and should also account for computing the TER
differential between regular and direct plans in each scheme.
(f) The commission paid shall be recovered on pro-rata basis from the
distributors, if the SIP is not continued for the period for which the
commission is paid.’
11.5.4. In case of misuse of the carve out for SIPs, the same would be
discontinued and appropriate action would be taken against the errant
participants. Further, the need of this carve out would be reviewed by
SEBI as and when required.
11.5.5. In case of investments made by the Sponsor(s), no brokerage or
commission shall be paid304.
11.5.6. The distributors shall disclose all the commissions (in the form of trail
commission or any other mode) payable to them for the different
competing schemes of various Mutual Funds from amongst which the
scheme is being recommended to the investor.
11.6. Additional incentives to distributors for onboarding new individual
investors from B-30 cities and women investors305
11.6.1. New investments / inflows eligible for the additional commission:
(a) New individual investors (new PAN) from B-30 cities, at the mutual
fund industry level;
(b) New women individual investors (new PAN) from both Top 30 and
B-30 cities.
(c) The top 30 cities shall mean top 30 cities based on AMFI data on
‘AUM by Geography – Consolidated Data for Mutual Fund
Industry’ as at the end of the previous financial year.
304 SEBI Circular No. MFD/CIR No.3/211/2001 dated April 30, 2001, SEBI Circular No. MFD/CIR No.5/153/2001 dated May
24, 2001.
305 SEBI Circular No. HO/(83)2025-IMD-POD-1/I/152/2025 dated November 27, 2025
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11.6.2. Incentive Structure:
(a) AMCs shall pay additional commission to distributors for
onboarding eligible new investors, subject to the conditions
specified in Paragraph 11.6.1 above.
(b) The structure of such additional commission shall be as under:
Investment Commission Structure
Mode
Lump Sum 1% of the amount of the first application subject
Investment to a maximum of ₹2,000, provided the investor
remains invested for a minimum period of one
year
Systematic 1% of the total investment made during the first
Investment
year, subject to a maximum of ₹2,000.
Plan (SIP)
11.6.3. The additional distribution commission shall be paid from the 2 basis
points on daily net assets, mandated to be set apart annually by AMCs
for investor education, awareness and financial inclusion initiatives,
subject to adequate claw back provisions.
11.6.4. The additional commission specified at Paragraph 11.6.2(b) shall be in
addition to the existing trail commission paid to the distributor from the
scheme.
11.6.5. Distributors shall be eligible to receive the additional commission for
mobilizing investments from new women investors from Top-30 cities
and in cases where the commission for new investment from B-30 cities
has not been claimed for the same woman investor/ investment. Dual
incentives for the same investor/investment shall not be permitted.
11.6.6. Payment of additional distribution commission in the manner specified
in Paragraph 11.6.2 above, shall be mandatory for all schemes of a
mutual fund, except the following:
(a) Exchange Traded Funds (ETFs);
(b) Fund of Funds (domestic) with more than 80% of Assets Under
Management (AUM) invested in domestic funds;
(c) Schemes having duration requirement of less than one year:
(i) Overnight Fund;
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(ii) Liquid Fund;
(iii) Ultra Short Duration Fund; and
(iv) Low Duration Fund.
11.6.7. Any change in the offer document, pursuant to the revised incentive
structure shall not be considered as a Fundamental Attribute Change.
11.6.8. AMFI in consultation with SEBI has issued the necessary
implementation standards for uniform implementation of the additional
incentive framework.
11.7. Entry and exit load 306
11.7.1. There shall be no entry load for all Mutual Fund schemes.
11.7.2. The exit load charged, if any, shall be credited to the scheme.
11.7.3. Exit load shall not be charged on bonus units, units allotted on
reinvestment of dividend and switch from regular plan to direct plan or
vice-a-versa under the same scheme. Necessary disclosures in this
regard shall be made in the SID filed with the Board.
11.7.4. While charging exit loads, no distinction among unit holders shall be
made based on the amount of subscription307. While complying with the
same, AMCs shall ensure that “any imposition or enhancement in the
load shall be applicable on prospective investments only.308 309
11.7.5. Further, the parity among all classes of unit holders in terms of charging
exit load shall be made applicable at the portfolio level310.
11.7.6. Goods & Service Tax on exit load, if any, shall be paid out of the exit
load proceeds and exit load net of Goods & Service Tax, if any, shall be
credited to the scheme.
11.8. Soft-dollar Arrangements311:
11.8.1. Soft-dollar arrangement refers to an arrangement between AMCs and
brokers in which the AMC executes trades through a particular broker
and in turn the broker may provide benefits such as free research,
hardware, software or even non-research-related services, etc., to the
AMC.
306 SEBI Circular No SEBI/IMD/CIR No. 4/ 168230/09 dated June 30, 2009
307 SEBI Circular No. SEBI / IMD / CIR No. 6 /172445/ 2009 dated August 7,2009 All Mutual Funds shall ensure compliance
with this circular on or before August 24, 2009
308 SEBI Circular No - SEBI / IMD / CIR No. 7 /173650 / 2009 dated August 17,2009 and SEBI circular No. SEBI/IMD/CIR No.
5/126096/08 dated May 23, 2008
309 Refer SEBI email dated July 07, 2010, Refer SEBI letter No. SEBI/HO/IMD/DF2/OW/P/2019/271771/1 dated October 15,
2019
310 SEBI Circular No - SEBI / IMD / CIR No. 7 /173650 / 2009 dated August 17,2009
311 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2016/42 dated March 18, 2016
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11.8.2. Such arrangements between AMCs and brokers shall be limited to only
benefits (like free research report, etc.) that are in the interest of
investors and the same shall be suitably disclosed.
11.9. Investor Education and Awareness 312:
11.9.1. Within the maximum base expense ratio limits specified for mutual fund
schemes under Regulation 66(7), AMCs shall annually set apart the
following amount for investor education, awareness and financial
inclusion initiatives:
Sl Particulars % of daily net
No. assets of the
scheme
(a) Fund of Funds (FoFs) investing more NIL
than 80% of its NAV in the underlying
domestic funds
(b) ETFs and Index Funds. 0.01%
(c) All scheme other than schemes 0.02%
covered at point (i) and (ii) above
11.9.2. AMCs and AMFI shall carry out focused investor education and
awareness initiatives for passive funds.
11.9.3. 313Certain portion of the 2 basis points of daily net assets shall be set
aside by Mutual Funds/AMCs for investor education and awareness
initiatives at industry level.
11.9.4. Initiatives under ‘Investor Education and Awareness’ shall also include
financial inclusion initiatives, as may be approved by the Board from
time to time.314
11.9.5. For the purpose of increasing awareness of Mutual Funds as a
financial product category, celebrity endorsements315 shall be permitted
at industry level, subject to the following conditions:
312 SEBI Circular No. CIR/IMD/DF/21/2012 dated September 13, 2012, Refer SEBI letter No. IMD/DF2/RS/813/2016 dated
January 08, 2016, Refer SEBI letter No. IMD/DF2/RS/201712507/1 dated May 31, 2017, Refer SEBI letter No.
SEBI/HO/IMD/DoF4/0W/P/2019/9576/1 dated April 12, 2019, Refer SEBI letter No. SEBI/HO/IMD2/OW/P/27647/2019 dated
October 29, 2019, Refer SEBI letter No. SEBI/HO/OW/IMD-II/DOF3/P/2019/34582/1 dated December 24, 2019, Refer SEBI
Letter No. SEBI/HO/IMD-II/IMD-II_DOF11/P/OW/2022/60035/1 dated November 30, 2022, Refer SEBI Letter No.
SEBI/HO/IMD/IMD-SEC-1/P/OW/2023/9455/1 dated March 03, 2023
313 SEBI Circular No. CIR/IMD/DF/23/2017 dated March 15, 2017
314 SEBI Circular No. SEBI/HO/IMD/PoD1/P/CIR/2025/21 dated February 20, 2025
315 Refer SEBI letter No. SEBI/HO/IMD/IMD-PoD-2/P/OW/2022/59612/1 dated November 28, 2022
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(a) Celebrity endorsement shall be allowed only at industry level, for
the purpose of increasing awareness of Mutual Funds as a
financial product category.
(b) Such celebrity endorsements shall not promote a scheme of a
particular Mutual Fund or be used as a branding exercise of a
Mutual Fund / AMC.
(c) Expenses towards such celebrity endorsements for increasing
awareness of Mutual Funds shall be limited to the amounts that
are aggregated by Mutual Funds at industry level.
(d) Prior approval of the Board shall be obtained for issuance of any
endorsement of Mutual Funds as a financial product, which
features a celebrity for the purpose of increasing awareness of
Mutual Funds.
11.10. Allocation of borrowing costs316
11.10.1. With regard to the cost of borrowings in terms of Regulation 42(1). it has
been decided that for a given scheme, the same shall be adjusted
against the portfolio yield (i.e. Yield to Maturity (YTM) of the fund as on
previous day) of the scheme and borrowing costs in excess of portfolio
yield, if any, shall be borne by the AMC.
11.11. Obligations of the Trustees and AMCs317
11.11.1. Trustees shall, in the HYTR, provide the following to the Board:
(a) Confirmation of compliance with relevant provisions of this Chapter
by the AMC.
(b) Complete disclosures regarding the investor education,
awareness and financial inclusion initiatives undertaken.
(c) Efforts undertaken by AMC to increase geographical penetration
of mutual funds and the details of opening of new branches,
especially at locations beyond top 30 cities.
11.12. No pass back, either directly or indirectly, shall be offered by
MFs/AMCs/Distributors to investors for making fresh investment or
continuation of their existing investments.
316 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2019/42 dated March 25, 2019
317 SEBI Circular No. SEBI/HO/IMD/PoD1/P/CIR/2025/21 dated February 20, 2025
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CHAPTER 12: IDCW DISTRIBUTION PROCEDURE318 319
12.1. All Schemes of Mutual Funds shall name the IDCW option(s) in the following
manner:
Option / Plan Name
IDCW Payout Payout of Income Distribution cum
capital withdrawal option
IDCW Re-investment Reinvestment of Income Distribution cum
capital withdrawal option
IDCW Transfer Plan Transfer of Income Distribution cum
capital withdrawal plan
12.2. Offer documents shall clearly disclose that the amounts can be distributed out
of investors capital (Equalization Reserve), which is part of sale price that
represents realized gains. Further, AMCs shall ensure that the said disclosure
is made to investors at the time of subscription of such options/plans.
12.3. AMCs shall ensure that whenever distributable surplus is distributed, a clear
segregation between income distribution (appreciation on NAV) and capital
distribution (Equalization Reserve) shall be suitably disclosed in the
Consolidated Account Statement provided to investors.
12.4. 320The payment of IDCW to the unitholders shall be made within 7 working
days from the record date.
12.5. Guidelines for all Mutual Fund Schemes/plans which intend to declare
the IDCW321:
12.5.1. Unlisted Scheme(s)/ Plan(s)
(a) The Trustees shall decide the quantum of IDCW and the record
date in their meeting322. IDCW so decided, shall be paid, subject
to availability of distributable surplus.
(b) Record date shall be the date which will be considered for the
purpose of determining the eligibility of investors whose names
appear on the register of unit holders for receiving IDCW. The NAV
318 SEBI Circular No. SEBI/IMD/CIR No.1/64057/06 dated April 4, 2006, SEBI Circular No. SEBI/HO/IMD/DF3/CIR/P/2020/194
dated October 05, 2020.
319 For details on advertisement on dividend please refer to Chapter No. 14 on ‘Advertisements’
320 Regulation 46 of the SEBI (Mutual Funds) Regulations, 2026 & SEBI Circular No. SEBI/HO/IMD/IMD-I
DOF2/P/CIR/2022/161 dated November 25, 2022
321 SEBI Circular No SEBI/IMD/CIR No. 3/65370/06 dated April 21,2006
322 Clause 7 of Second Schedule of SEBI (Mutual Funds) Regulations, 2026
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shall be adjusted to the extent of IDCW distribution and statutory
levy, if applicable, at the close of business hours on record date.
(c) 323Within one calendar day of the decision by the trustees, AMC
shall display the decision including the record date on the website
of AMC. The record date shall be two working days324 from the
date of publication in at least one English newspaper or in a
newspaper published in the language of the region where the Head
Office of the mutual fund is situated, whichever is issued earlier.
(d) Before the issue of such notice, no communication whatsoever
indicating the probable date of IDCW declaration shall be issued
by any Trustees of Mutual Funds, AMCs or its distributors of its
products.
(e) The notice shall, in font size 10, bold, categorically state that
pursuant to IDCW distribution, NAV of the scheme would fall to the
extent of payout and statutory levy (if applicable).
12.5.2. Liquid / Debt Schemes with frequent IDCW distribution
(a) The requirement of giving notice is not mandatory for scheme(s)/
plan(s)/ option(s) with IDCW distribution frequency ranging from
daily up to monthly distribution if requisite disclosures in this regard
are made in the SID.
(b) 325With respect to declaration of IDCW upto monthly frequency, the
trustees may delegate the officials of AMC to declare and fix the
record date as well as decide the quantum of IDCW, subject to the
following;
(i) Record date is specified in the offer document and the same
is adhered to.
(ii) Such delegation to AMC officials shall mandatorily include
CEO of AMC and making him responsible for such
declaration of IDCW, subject to adhering to the policy
framework as approved by Trustees.
(iii) The policy shall specify appropriate parameters or factors (for
example Growth in NAV from the last IDCW declared, or
availability of adequate distributable surplus, or minimum
reserves to be maintained, etc.) to be considered prior to
deciding the quantum.
323 SEBI Circular No.SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021
324 SEBI Circular No. SEBI/HO/IMD/IMD-I DOF2/P/CIR/2022/161 dated November 25, 2022
325 SEBI Circular No.SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021
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(iv) Actual IDCW declared to be ratified by the Trustees in its
immediately following Board meeting.
12.5.3. Listed Schemes/Plans
(a) Listed scheme(s)/ plan(s) shall follow the requirements stipulated
in the Listing Agreement for IDCW declaration and distribution.
12.6. Non availability of Unit Premium Reserve for IDCW distribution326
12.6.1. The format for Scheme Balance Sheet (including Abridged) provides for
disclosure of Unit Premium Reserve.
12.6.2. Unit Premium Reserve, which is part of the sales price of units that is
not attributable to realized gains, cannot be used to pay IDCW. In this
regard:
(a) When units of an open-ended scheme are sold, and sale price is
higher than face value of the unit, part of sale proceeds that
represents unrealized gains shall be credited to a separate
account (i.e. Unit Premium Reserve) and shall be treated at par
with unit capital and the same shall not be utilized for the
determination of distributable surplus.
(b) When units of an open-ended scheme are sold, and sale price is
less than face value of the unit, the difference between the sale
price and face value shall be debited to distributable reserves and
the IDCW can be declared only when distributable reserves
become positive after adjusting the amount debited to reserves as
per MF Regulations327.
326 SEBI circular No. SEBI/IMD/CIR No 18 / 198647 /2010 dated March 15, 2010
327 Clause (h) of Eighth Schedule of SEBI (Mutual Funds) Regulations, 2026
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CHAPTER 13: INVESTMENT BY SCHEMES
13.1. Prudential limits for investments by mutual fund scheme in equity and
debt instruments
In terms of Sixth schedule of MF Regulations, the AMC shall ensure
compliance with the following prudential norms:
Sr. Particulars Description Maximum Proviso
no Investment/
exposure limit
1. Investment by Investment in equity 10% of NAV (A) Such limit shall not be
mutual fund shares or equity applicable for investment in
scheme in related instruments of index fund or ETF or Sector or
equity any entity by a Mutual Thematic scheme.
instruments Fund scheme
(B) The limit shall also be
applicable for investment in
units of Venture capital funds.
2. Single issuer (a) Investment by a (i) Overall limit- (A) Such limit shall also be
limit for Mutual Fund 10% of NAV applicable to mortgage
investment in scheme in debt backed securitized debt which
debt instruments are rated not below
instruments comprising money (ii) Sub limits- investment grade by a credit
market based on rating agency registered with
instruments and credit rating of the Board
non-money market the
(B) Such limit shall not be
instruments issued instruments
applicable for investments in
by a single issuer for actively
debt exchange traded funds,
which are rated not managed
Government Securities,
below investment mutual fund
treasury bills and triparty repo
grade by a credit schemes other
on Government securities or
rating agency than credit risk
treasury bills.
authorized to carry funds -
out such activities (C) Such limit is not applicable for
(I) 10% of its
under the Act. investment in securitized debt
NAV in debt
(mortgage backed securities
and money
and asset backed securities),
market
at the originator level.
securities
rated AAA; (D) The long term rating of issuers
or shall be considered for the
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(II) 8% of its money market instruments.
NAV in debt However, if there is no long
and money term rating available for the
market same issuer, then based on
securities credit rating mapping of Credit
rated AA; or Rating Agencies between
short term and long term
(III) 6% of its
ratings, the most conservative
NAV in debt
long term rating shall be taken
and money
for a given short term rating.
market
Exposure to government
securities
money market instruments
rated A and
such as TREPS on G-Sec/ T-
below issued
bills shall be treated as
by a single
exposure to government
issuer
securities.
(b) Additional Additional 2% of
Investment in any NAV (i.e. upto
issuer as well as its maximum 12% of
instruments NAV)
(based on ratings)
with prior approval
of the Board of
Trustees and
Board of Directors
of the AMC
3. Investment in Investment by Mutual 10% of debt Mutual fund scheme shall not
Unlisted Debt fund schemes in portfolio of the invest in any other unlisted debt
Securities unlisted Non scheme instruments including commercial
Convertible papers (CPs), other than (a)
Debentures (NCDs) government securities, (b) other
having a simple money market instruments and (c)
structure (i.e. with derivative products such as
fixed and uniform Interest Rate Swaps (IRS),
coupon, fixed maturity Interest Rate Futures (IRF), etc.
period, without any which are used by mutual funds
options, fully paid up for hedging.
upfront, without any
credit enhancements
or structured
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obligations) and are
rated and secured
with coupon payment
frequency on monthly
basis.
4. Investment in Investments shall only 5% of the net (A) All such investments shall be
Unrated Debt be made in such assets of the made with the prior approval of
Instruments/S instruments, including scheme the Board of AMC and the
ecurities# bills re-discounting, Board of trustees.
usance bills, etc., that
(B) The limit specified is for
are generally not
investment in unrated debt
rated and for which
and money market
separate investment
instruments, other than
norms or limits are not
government securities,
provided in MF
treasury bills, derivative
Regulations and
products such as Interest Rate
various circulars
Swaps (IRS), Interest Rate
issued thereunder.
Futures (IRF) etc. by mutual
fund schemes.
(C) The single issuer limit and the
group exposure limit shall be
calculated at the issuing bank
level as Bill Rediscounting
Schemes (BRDS) are issued
with recourse to the issuing
bank.
(D) Investment in BRDS by debt
schemes of mutual funds shall
be considered as exposure to
financial services sector for
the purpose of sector
exposure limits.
5. Investment in Investment by mutual 10% of paid-up Investment in the asset
paid-up fund under all its capital of the management company or the
capital of a schemes in any company trustee company of a mutual fund
company at company’s paid up shall be governed by Regulation
Or
mutual fund capital carrying voting 6(1)(a).
level rights. 10 percent of
units of REITs
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issued by a single
issuer
6. Investment by (a) Investment in any 0% of NAV Not permitted to invest
Mutual Fund unlisted security of
Schemes in an associate or
Associate or group company of
group the sponsor
company of
the sponsor (b) Investment in any 0% of NAV Not permitted to invest
security issued by
way of private
placement by an
associate or group
company of the
sponsor; or
(c) Investment in the 25% of NAV (A) Widely tracked and non-
listed securities of bespoke indices shall be
group companies indices that are tracked by
of the sponsor by passive funds or act as
all mutual fund primary benchmark for
schemes except actively managed funds with
Equity oriented collective AUM of INR 20,000
ETFs and Index Cr. and above.
Funds
(B) The list of indices based on the
criteria specified above, shall
(d) Investment in the In accordance
be determined on half yearly
listed securities of with the
basis as per the above
group companies weightage of the
specified AUM threshold as on
of the sponsor by constituent of the
March 31st and September
Equity oriented underlying index,
30th respectively. The list of
ETFs and Index subject to an
such indices shall be updated
Funds based on overall cap of
by AMFI and published on its
widely tracked and 35% of NAV of the
website by April 15th and
non-bespoke scheme, in the
October 15th respectively
indices group companies
every year, after seeking
of the sponsor
Board’s approval.328
7. Investment (a) Investment in other 20% of net assets Such limit shall be excluding
Limits for group of scheme investments in securities issued
328 SEBI Circular SEBI/HO/IMD/IMD-PoD-2/P/CIR/2024/098 dated July 08, 2024
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Debt by Public Sector Units, Public
Schemes in Financial Institutions and Public
debt and (b) Additional 5% of net assets Sector Banks
money Investment in other of scheme (i.e.
market group with prior upto maximum
instruments in approval of the 25% of net assets
group Board of Trustees of scheme)
companies* and Board of AMC
(c) Investment in 10% of net assets
group companies of scheme
of both the sponsor
and the AMC
(d) Additional 5% of net assets
Investment in of scheme (i.e.
group companies upto maximum
of both the sponsor 15% of net assets
and the AMC with of scheme)
prior approval of
the Board of
Trustees and
Board of AMC
8. Investment (a) Investment in a 20% of net assets Such limit shall be excluding
Limits for particular sector of scheme investments in Bank CDs, triparty
Debt repo on Government securities or
Schemes in treasury bills, G-secs, Tbills, short
debt and term deposits of Scheduled
money commercial banks and AAA rated
market securities issued by Public
instruments in Financial Institutions and Public
a specific Sector Banks.
sector
(b) Additional 10% of net assets (A) Additional exposure in
exposure to of scheme (over securities issued by HFCs
financial service and above the shall be rated AA and above
sector through limit of 20% and these HFCs are
investment in mentioned above) registered with National
Housing Finance Housing Bank(NHB)
Companies
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(B) Overall maximum investment
(c) Additional 5% of net assets
in housing finance companies
exposure to of scheme (over
shall not exceed the sector
financial service and above the
exposure limit of 20% of the
sector through limit of 20%
net assets of the scheme.
investment in mentioned above)
securitized debt (C) Appropriate disclosures in this
instruments based regard shall be made in SID
on retail housing and KIM of debt schemes.
loan portfolio
and/or affordable
housing loan
portfolio.
9. Investment Mutual Funds (i) No Mutual (A) Additional Tier I bonds and
limit for investment in certain Fund under all Tier 2 bonds issued under
investment in debt instruments with its schemes Basel III framework may be
debt special features viz. shall own considered as some
instruments subordination to more than instruments having special
with special equity (absorbs 10% of such features.
features losses before equity instruments
(B) The debt instruments having
capital) and /or issued by a
such special features, which
convertible to equity single issuer
otherwise are Non-Convertible
upon trigger of a pre-
(ii) No Mutual Debentures, may be treated
specified event for
Fund scheme as debt instruments until
loss absorption.
shall invest: converted to equity.
(I) more than (C) Such limit shall be within
10% of its overall limit for debt
NAV of the instruments issued by a single
debt portfolio issuer as specified at Item No.
of the 2 under Paragraph 13.1.
scheme in
such
instruments;
and
(II) more than
5% of its
NAV of the
debt portfolio
of the
scheme in
such
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instruments
issued by a
single issuer.
10. In vestment of (a) Investments in 10% of the debt (A) Such limit is not applicable for
mutual fund debt instruments portfolio of the investment in securitized debt
schemes in having scheme instruments, defined in SEBI
debt unsupported rating (Public Offer and Listing of
instruments (i.e. without Securitized Debt Instruments),
having factoring-in credit Group exposure Regulation, 2008.
structured enhancement) in such
(B) Investment in debt
obligation/cre below investment instruments - 5%
instruments, having credit
dit grade and the debt portfolio
enhancements backed by
enhancement of the scheme
(b) Investments in equity shares directly or
s
debt instruments indirectly, shall have a
having supported minimum cover of 4 times
rating (i.e. after considering the market value
factoring- in credit of such shares.
enhancement)
AMCs may ensure that the
above investment
investment in debt instruments
grade.
having credit enhancements
are sufficiently covered to
address the market volatility
and reduce the inefficiencies
of invoking of the pledge or
cover, whenever required,
without impacting the interest
of the investors. In case of fall
in the value of the cover below
the specified limit, AMCs shall
initiate necessary steps to
ensure protection of the
interest of the investors.
(C) Details of investments in debt
instruments having structured
obligations or credit
enhancement features shall
be disclosed distinctively in
the monthly portfolio
statement of mutual fund
schemes.
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#AMCs may, for the purpose of maintain operational flexibility, constitute committees for
approval of unrated instruments. However, detailed parameters for investment in unrated debt
instruments shall be approved by the Board of the AMC and Trustees. Details of such
investments shall be communicated by the AMCs to the Trustees in their periodical reports,
along with clear indication as to how the parameters set for investments have been complied
with. Prior approval of the Board of the AMC and Trustees shall be required in case investment
is sought to be made in an unrated security falling outside the prescribed parameters.
*AMCs shall publish on their respective website a list of their group companies and those of
their sponsor(s). AMFI shall publish on its website a list of all group companies along with
names and identifier of the respective group that are considered for calculation of group
exposure by mutual fund schemes and also the sector to which each company belongs.
These disclosures shall be made on the first working day of each calendar quarter.
Note 1: Prudential investment norms as per MF Regulations stipulating limits
for investments in debt securities issued by a single issuer are applicable to
all debt securities issued by public bodies or institutions such as electricity
boards, municipal corporations, state transport corporations etc. guaranteed
by either State / Central Government. Government securities issued by
Central and/or State Government or on its behalf, by the RBI are however
exempt from these limits.
Note 2: Non-convertible Preference shares (NCPs) shall be treated as debt
instruments and investment restrictions as applicable to debt instruments shall
be applicable to NCPs.
Note 3: Trustees shall review exposure of a mutual fund, across all its
schemes, towards individual issuers, group companies and sectors. Trustees
shall satisfy themselves on the levels of exposure and confirm the same to the
Board in the HYTR.
Note 4: Listed debt instruments shall include listed as well as to be listed debt
instruments.
13.2. Investment by Liquid Scheme and plans329 330
13.2.1. The ‘liquid fund schemes and plans’ shall make investment in /purchase
debt and money market securities with maturity of upto 91 days only.
This shall also be applicable in case of inter scheme transfer of
securities
13.2.2. Maturity calculation:
(a) For securities where principal is to be repaid in a single payout:
Maturity of security shall mean the residual maturity.
329 SEBI Circular No -SEBI/IMD/CIR No.13/150975 / 09 dated January 19, 2009
330 With effect from November 1, 2009 the requirements stated at paragraph 13.1.10 above shall apply to such inter-se scheme
transfers also.
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(b) For securities where principal is to be repaid in more than one
payout: Maturity of security shall be calculated based on weighted
average maturity of the security.
(c) For securities with put and call option (daily or otherwise): the
residual maturity of securities shall not be greater than 91 calendar
days.
(d) Settlement Adjustments: Maturity dates falling on non-business
days shall be settled on the next business day.
13.3. The above requirements shall be disclosed in the SID and shall form part of
the investment allocation pattern. Any deviation from these requirements shall
be viewed as violation of investment restrictions.
13.4. Investments by Index Funds331
13.4.1. Investments by index funds shall be in accordance with the weightage
of the scrips in the specific index as disclosed in the SID. In case of
sector or thematic scheme, the upper ceiling on investments may be in
accordance with the weightage of the scrips in the representative
sectoral index or sub index as disclosed in the SID or 10% of the NAV
of the scheme, whichever is higher.
13.5. Investment by Close ended debt schemes332
13.5.1. Close ended debt schemes shall invest only in such securities which
mature on or before the date of the maturity of the scheme333.
13.5.2. Close ended debt schemes shall not invest in perpetual bonds334.
13.6. Stock Lending Scheme335
13.6.1. The following guidelines are issued to facilitate lending of securities by
Mutual Funds through intermediaries approved by the Board in
accordance with the Stock Lending & Borrowing Scheme. Mutual Funds
schemes may engage in short selling of securities as well as lending
and borrowing of securities after making additional disclosures including
risk factors in the SID in accordance with Paragraph 1.2.2, as amended
from time to time.
13.6.2. Disclosure Requirements
(a) The following information shall be disclosed in the SID:
331 SEBI Circular No -MFD/CIR/09/014/2000 dated January 5, 2000, Refer SEBI letter No. SEBI/H0/0W/IMD-
II/DOF3/P/24098/2022 dated June 10, 2022
332 Refer SEBI letter No. SEBI/HO/IMD/IMD-RAC-2/P/OW/2023/26266/1 dated June 28, 2023
333 SEBI Circular No. IMD/CIR No. 12/147132/08 dated December 11, 2008. Also refer Regulations 29(2), 30,66(5)(n),43 of
SEBI (Mutual Funds) Regulations, 2026 for other provisions pertaining to close-ended schemes
334 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2021/032 dated March 10, 2021
335 SEBI/IMD/CIR No.6/127947/08 dated June 6, 2008 read with SEBI Circular No MFD/CIR/01/047/99 dated February 10,
1999
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(i) Intention to lend securities belonging to a particular Mutual
Fund scheme in accordance with the guidelines on securities
lending and borrowing issued by the Board from time to
time336.
(ii) Exposure limit with regard to securities lending, both for the
scheme as well as for a single intermediary.
(iii) Risks factors such as loss, bankruptcy etc. associated with
such transactions.
13.6.3. Reporting Requirement
(a) The AMC(s) shall report to the Trustees on a quarterly basis, the
level of lending in terms of value, volume and intermediaries,
earnings and/or losses, value of collateral security etc.
(b) The Trustees shall periodically review the securities lending
contract and take reasonable steps to ensure that the same is not,
in any way, detrimental to the interests of the unit holders of the
scheme.
(c) The Trustees shall offer their comments on the above aspects in
the HYTR filed with the Board.
13.6.4. In case an existing SID does not provide for lending of securities, AMCs
may still lend securities belonging to the scheme, in accordance with the
Guidelines issued by the Board, provided approval is obtained from the
Trustees and the intention to lend securities is conveyed to the unit
holders.
13.7. Investments in Short Term Deposits (STDs) of Scheduled Commercial
Banks- pending deployment 337
13.7.1. In terms of clause 8 of sixth schedule of MF Regulations, the guidelines
for deployment of funds in short term deposits of commercial banks are
as under:
(a) "Short Term" shall be treated as a period not exceeding 91
calendar days.
(b) Such Deposits shall be held in the name of the concerned scheme.
13.7.2. Scheme level limit
336 SEBI Circular No -SEBI / IMD / CIR No 14 / 187175/ 2009 dated December 15,2009, SEBI Circulars No. SEBI/IMD/CIR
No.9/20306/03 dated November 12, 2003, SEBI Circular No. SEBI/IMD/Cir No.1/91171/07 dated April 16, 2007
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(a) No mutual fund scheme shall park more than 15% of their net
assets in STDs across all scheduled commercial banks. This limit
may be extended to 20% with prior approval of trustees.
(b) No mutual fund scheme shall park more than 10% of the net assets
in STDs with any one scheduled commercial bank including
subsidiaries.
13.7.3. Mutual Fund level limit
(a) Parking of funds in STDs of associate and sponsor scheduled
commercial banks together shall not exceed 20% of the total
deployment by the mutual fund in STDs.
13.7.4. Trustees/AMCs shall ensure that no funds of a scheme is parked in STD
of a bank which has invested in that scheme. Trustees/AMCs shall also
ensure that the bank in which a scheme has STD do not invest in the
said scheme till the time the scheme has STD with such bank.
13.7.5. AMCs shall not be permitted to charge investment management and
advisory fees for parking of funds in STDs of Scheduled Commercial
banks.
13.7.6. Investments made in short term deposits pending deployment of funds
shall be recorded and reported to the Trustees including the reasons for
the investment especially comparisons with interest rates offered by
other scheduled commercial banks.
13.7.7. AMCs and Trustees shall certify compliance with the provisions of the
MF Regulations pertaining to parking of funds in STDs pending
deployment, at all points of time, in the CTR and HYTR respectively,
filed with the Board Further, monthly portfolio statements shall disclose
all funds parked in STDs under a separate heading. Details shall also
include name of the bank, amount of funds parked, percentage of NAV.
13.7.8. Except for Paragraph 13.7.7 above, the above guidelines shall not apply
to term deposits placed as margins for trading in cash and derivatives
market. However, all term deposits placed as margins shall be disclosed
in the monthly portfolio statements under a separate heading. Details
such as name of bank, amount of term deposits, duration of term
deposits, percentage of NAV shall be disclosed.
13.8. Participation of mutual funds in repo in corporate debt securities
13.8.1. Mutual Funds can participate in repos in corporate debt securities as per
the guidelines issued by RBI from time to time, subject to the following
conditions:
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13.8.2. Exposure Limits: The gross exposure of any mutual fund scheme to
repo transactions in corporate debt securities shall not be more than 10
% of the net assets of the concerned scheme. However, the total
cumulative gross exposure (i.e. Repo + Equity + Debt + Derivatives)
shall not exceed 100% of the net assets of the concerned scheme.
13.8.3. Eligible Securities: Mutual funds shall participate in repo transactions on
following corporate debt securities:
(a) Listed AA and above rated corporate debt securities.
(b) Commercial Papers (CPs) and Certificates of Deposits (CDs).
13.8.4. The credit rating of exposures on repo transactions for various purposes
including for PRC matrix, liquidity ratios, Risk-o-meter etc. shall be same
as that of the underlying securities, i.e., on a look through basis.
13.8.5. For transactions where settlement is guaranteed by a Clearing
Corporation, the exposure shall not be considered for the purpose of
determination of investment limits for single issuer, group issuer and
sector level limits.
13.8.6. In terms of Regulation 42(1), mutual funds shall borrow through repo
transactions only if the tenor of the transaction does not exceed a period
of six months.
13.8.7. AMCs and Trustees shall frame clear guidelines about inter-alia the
category of counterparty, credit rating of counterparty, tenor of collateral
and applicable haircuts. AMCs shall also ensure compliance with Sixth
schedule of MF Regulations about restrictions on investments, wherever
applicable, with respect to repo transactions in corporate debt
securities.
13.8.8. Disclosure: Mutual Funds shall provide adequate disclosure as under:
Disclosure Document Requirement
SID of the concerned  Intention to participate in repo
scheme transactions in corporate debt
securities in accordance with
directions issued by RBI and
SEBI from time to time;
 The exposure limit for the
scheme; and
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 The risk factors associated with
repo transactions in corporate
bonds.
HYTR and monthly The details of repo transactions of the
portfolio statements schemes in corporate debt securities,
including details of counterparties,
amount involved and percentage of
NAV
13.9. Transactions in Corporate Bonds/Commercial Papers through Request
for Quotes (“RFQ”) platform:
13.9.1. In order to increase the liquidity on exchange platform, mutual funds
shall on a monthly basis, undertake minimum 25% and 10% of their total
secondary market trades by value (excluding inter scheme transfer
trades) in corporate bonds and commercial papers respectively, by
placing/ seeking quotes through one-to-many mode on the RFQ
platform of Stock Exchanges and
13.9.2. Calculation: The percentages as specified above shall be reckoned on
the average of secondary market trades by value during the immediate
preceding three months on rolling basis.
For example, for the month of October 2025, Mutual Funds shall
undertake 25% (by value) of their average secondary market trades
(excluding IST) done in immediate preceding three months i.e. July
2025, August 2025 and September 2025 for Corporate bonds by
placing/seeking quotes through RFQ platform for Stock exchanges.
13.9.3. All transactions in Corporate Bonds and Commercial Papers wherein
Mutual Fund is on both sides of the trade shall be executed through RFQ
platform of stock exchanges in one-to-one mode.
13.9.4. Any transaction entered by mutual fund in Corporate Bonds in one to
many mode and gets executed with another mutual fund shall also be
counted for the aforesaid percentage requirement
13.9.5. Mutual Funds are permitted to accept the Contract Note from the
brokers for transactions carried out in One to one (OTO) and One to
Many (OTM) modes of RFQ platform.
13.10. Reconciliation procedure for investment in Government Securities
13.10.1. According to the RBI guidelines, issued to all SGL account holders, in
order to make transactions in government securities transparent, a
monthly reconciliation system has been introduced between RBI and
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Mutual Funds maintaining SGL/CSGL accounts with respect to
Government Securities on an ongoing basis.
(a) AMCs shall reconcile the balances reported in the monthly
statements furnished by RBI with the transactions undertaken by
them.
(b) This reconciliation procedure shall be made part of internal audit
and the auditors shall on a continuous basis, check the status of
reconciliation and submit a report to the Audit Committee.
(c) These reports shall be placed in the meetings of the Board of the
AMC and Trustees.
(d) AMCs shall submit, on a quarterly basis to the RBI, a certificate
confirming compliance with these requirements and any other
guidelines issued by the RBI from time to time in this regard.
(e) Compliance shall also be reported to the Board in the CTRs by
AMC(s) and HYTR by the trustees.
13.11. Overseas Investment
13.11.1. Mutual Funds are permitted to invest in following overseas instruments:
(a) ADR(s) and /or GDR(s) issued by Indian or foreign companies
(b) Equity of overseas companies listed on recognized stock
exchanges overseas
(c) Initial and follow on public offerings for listing at recognized stock
exchanges overseas
(d) Foreign debt securities in the countries with fully convertible
currencies, short term as well as long term debt instruments with
ratings not below investment grade by accredited/ registered credit
rating agencies
(e) Money market instruments rated not below investment grade
(f) Repos in the form of investment, where the counterparty is rated
not below investment grade; repo shall not however involve any
borrowing of funds by mutual funds.
(g) Government Securities where the countries are rated not below
investment grade
(h) Derivatives traded on recognized stock exchanges overseas only
for hedging and portfolio balancing with underlying as securities.
(i) Short-term bank deposits with banks overseas, where the issuer is
rated not below investment grade.
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(j) Overseas Funds: Units/ securities issued by overseas Mutual
Funds or Unit Trusts registered with overseas regulators and
investing in
(i) aforesaid securities
(ii) Real Estate Investment Trusts (REITs) listed on recognized
stock exchange overseas or
(iii) Unlisted overseas securities, not exceeding 10% of their net
assets.
13.11.2. Maximum applicable limit for overseas exposure by mutual funds:
Sr. No. Category Individual Limit Industry-wide
(per Mutual Fund) Limit (Total)
1 Overseas US $ 1 Billion US $ 7 Billion
Securities
2 Overseas ETFs US $ 300 Million US $ 1 Billion
(a) Allocation Methodology of the aforementioned limits: In case of
overseas investments specified at Paragraph 13.11.3.1 above,
each Mutual Fund shall have a reserved quota of US $50 million
individually, within the overall industry limit of US $ 7 billion.
13.11.3. New Fund Offers (NFOs): Mutual Funds launching new schemes
intending to invest in Overseas securities / Overseas ETFs shall
disclose intended overseas investment amounts that they plan to invest
in scheme documents, subject to the maximum limit specified at
Paragraph 13.11.3 above, as the case may be. Such limits disclosed in
scheme documents shall be valid for a period of 6 months from the date
of closure of NFOs. Further investment shall follow the norms for
ongoing schemes indicated below.
13.11.4. Ongoing Schemes: For all ongoing schemes that invest or are allowed
to invest in Overseas securities / Overseas ETFs, an investment
headroom of 20% of the average AUM in Overseas securities /
Overseas ETFs of the previous three calendar months would be
available to the Mutual Fund for that month, subject to the maximum
limits specified at Paragraph 13.11.3 above, as the case may be.
Note: The above disclosure Paragraph 13.11.4 and 13.11.5 shall be soft
limits for the purpose of reporting only by Mutual Funds on monthly basis
as per the Format No. 3I.
13.11.5. Management & Due Diligence
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(a) Management of Fund: Appointment of dedicated fund manager for
making overseas investments stipulated under Paragraphs
13.11.1(a) to 13.11.1(i) shall be optional338. However, the person
appointed as fund manager of such funds shall have adequate
expertise and experience to manage investments in overseas
securities. The Board of the AMCs shall be responsible for
ensuring compliance and reporting regarding the same to trustees,
on a periodic basis.
(b) Due diligence:
(i) The Board of the AMC and Trustees shall exercise due
diligence in making investment decisions and record the
same. They shall make a detailed analysis of risks and
returns of overseas investment and how these investments
would be in the interest of investors. Investment shall be
made in liquid actively traded securities /instruments
(ii) The Board of the AMC and Trustees shall prescribe detailed
parameters for making such investments which shall include
identification of countries, country rating, country limits etc.
They shall satisfy themselves that the AMC has experienced
key personnel, research facilities and infrastructure for
making such investments. Other specialized agencies and
service providers associated with such investments e.g.
custodian, bank, advisors etc. shall also have adequate
expertise and infrastructure facilities. Their past track record
of performance and regulatory compliance record, if they are
registered with foreign regulators, shall also be considered.
Necessary agreements may be entered into with them,
as required.
13.11.6. Mandatory disclosures and reporting requirements
(a) Intention to invest in foreign securities and/or ETF(s) shall be
disclosed in the SID. The attendant risk factors and returns
ensuing from such investments shall be explained clearly in the
SID. AMCs shall also disclose as to how such investments will
help in the furtherance of the investment objectives of the
scheme(s). Such disclosures shall be in a language
comprehensible to an average investor.
(b) Mutual Funds shall report, on a monthly basis, the utilization of
overseas investment limits, within 10 calendar days from the end
of each month as per Format No. 3I.
338 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-2/P/CIR/2024/30 dated April 30, 2024
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(c) Such investments shall be disclosed while disclosing monthly
portfolios, as per Format No. 4C, under a separate heading
"Foreign Securities and/or overseas ETF(s)." Further, the scheme
wise percentage of investments made in such securities shall be
disclosed while publishing the Half Yearly Results, as per Format
No. 4A, as a footnote.
(d) AMC shall provide detailed periodic reports to the Trustees
covering performance of overseas investments and amount
invested in various schemes and any breach of the exposure limit
laid down in the SID.
(e) The board of the AMC and Trustees shall review the performance
of schemes making overseas investments with appropriate
benchmark(s) as disclosed in the SID. Trustee shall offer their
comments on the compliance of all these guidelines in the HYTR
filed with the Board.
(f) AMCs shall disclose exposure limits i.e the percentage if assets of
the scheme they would invest in foreign securities/ ETF(s).
13.11.7. Investment by Existing Schemes
(a) In case SID of an existing scheme provides for investing in foreign
securities and attendant risk factors but which have not yet been
invested, AMC may invest in foreign securities consistent with the
investment objective of the scheme after issuing an addendum
regarding additional disclosures and accordingly informing the
same to unit holders.
(b) In case the SID of an existing scheme does not provide for
overseas investment, the scheme, if it so desires, may make such
investments in accordance with these Guidelines, provided that
prior to the overseas investments for the first time, the AMC shall
ensure that a written communication about the proposed
investment is sent to each unit holder and the same shall be
disclosed on the website of AMC. The communication to unit
holders shall also disclose the risk factors associated with such
investments.
13.11.8. Prudential Investment Norms
(a) All prudential limits specified in Sixth Schedule of MF Regulations
shall apply to overseas investment. However, the restrictions
relating to inter scheme investments specified at Clause 3 of Sixth
Schedule of MF Regulations and the applicable limits on inter
scheme investments specified at Paragraph 13.14 below shall not
apply to such investments.
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(b) Management fees and other expenses charged by the mutual
funds in foreign countries along with the management fee and
recurring expenses charged to the domestic mutual fund scheme
shall not exceed the total limits on expenses as prescribed under
Regulation 66(7). Where the scheme is investing only a part of the
net assets in overseas Mutual Funds, the same principle shall be
applicable for the part of investment. Details of calculation for
charging such expenses shall be reported to Board of AMC and
Trustee and shall also be disclosed in the Annual Report of the
scheme.
(c) The application for seeking approval for investing in overseas
securities shall be made to the Board in advance of making
investments. Upon receipt of approval from the Board, AMC(s)
shall send an intimation to overseas Investment Division, Foreign
Exchange Department, RBI.
13.11.9. Investments in Overseas Mutual Funds/ Unit Trusts by Indian
Mutual Funds339
(a) In terms of Paragraph 13.11.1 above, Indian Mutual Fund
schemes may also invest in overseas MF/UTs that have exposure
to Indian securities, provided that the total exposure to Indian
securities by these overseas MF/UTs shall not be more than 25%
of their assets.
(b) While investing in overseas MF/UTs that have exposure to Indian
securities, the Indian Mutual Fund schemes shall ensure the
following:
(i) Pooling: Contribution of all investors of the overseas MF/UT
is pooled into a single investment vehicle, with no side-
vehicles including segregated portfolios, sub-funds or
protected calls, etc.
(ii) Pari-passu and Pro-rata: Corpus of the overseas MF/UT is a
blind pool (i.e. common portfolio) with no segregated
portfolios. All investors in the overseas MF/UT have pari-
passu and pro-rata rights in the fund, i.e. they receive a share
of returns/gains from the fund in proportion to their
contribution and have pari-passu rights.
(iii) Independent investment manager/fund manager: Overseas
MF/UT is managed by an independent investment
manager/fund manager who is actively involved in making all
investment decisions for the fund. This ensures that the
339 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/149 dated November 04, 2024
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investments are made autonomously by the investment
manager/fund manager without influence, directly or
indirectly, from any of the investors or from any other entity.
(iv) Public disclosure: Such overseas MF/UTs disclose their
portfolios at least on a quarterly intervals to the public to
maintain transparency.
(v) No advisory agreement: There shall not be any advisory
agreements between Indian Mutual Funds and underlying
overseas MF/UTs, to prevent conflict of interest and avoid
any undue advantage to either of the parties.
(c) Breach of the limit:
(i) At the time of making investments (both fresh and
subsequent), Indian Mutual Fund schemes shall ensure that
the underlying overseas MF/UTs do not have more than 25%
exposure to Indian securities.
(ii) Subsequent to the investment, if the exposure by an
underlying overseas MF/UTs to Indian securities exceeds
25% of their net assets, an observance period of 6 months
from the date of publicly available information of such breach
(e.g. portfolio disclosures) shall be permitted to Indian Mutual
Fund schemes for monitoring of any portfolio rebalancing
activity by the underlying overseas MF/UT.
(iii) During the observance period, the Indian Mutual Fund
scheme:
(I) shall not undertake any fresh investment in such
overseas MF/UT.
(II) may resume their investments in such overseas MF/UT
in case the exposure to Indian securities by such
overseas MF/UT falls below the limit of 25%.
(d) Rebalancing of the portfolio:
(i) If the portfolio of an underlying overseas MF/UT is not
rebalanced within the 6-month observance period, Indian
Mutual Fund scheme shall liquidate its investments in the
concerned underlying overseas MF/UT within the next 6
months (‘liquidation period’) from end of the observance
period.
(ii) If the exposure to Indian securities by the underlying
overseas MF/UT falls below the prescribed limit of 25%
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during the liquidation period, the requirement at Paragraph
13.11.9(d)(i) above shall not be applicable.
(e) Non-compliance:
(i) If the Indian Mutual Fund/ Asset Management Company fails
to rebalance the portfolio of the scheme in line with the
aforesaid requirements, then after the 6-month liquidation
period, the Indian Mutual Fund/ Asset Management
Company shall:
(I) not be permitted to accept any fresh subscriptions in
concerned Indian Mutual Fund scheme;
(II) not be permitted to launch any new scheme;
(III) not levy exit load, if any, on the investors exiting such
scheme(s).
(f) Fundamental attribute change:
(i) The Indian Mutual Fund scheme(s) shall be exempted from
the requirement of a fundamental attribute change for any
change in underlying overseas MF/UT, subject to the
following:
(I) The underlying overseas MF/UT exceeds 25%
exposure to Indian securities, and;
(II) The Indian Mutual Fund scheme intends to invest in
other overseas MF/UT with similar investment
objectives, and;
(III) A notice cum addendum is issued to investors.
13.12. Investments in Indian Depository Receipts (IDRs)
13.12.1. Mutual funds can invest in Indian Depository Receipts [Indian
Depository Receipts as defined in Companies (Issue of Indian
Depository Receipts) Rules, 2004] subject to compliance with MF
Regulations and guidelines issued there under, specifically investment
restrictions as specified in the Sixth Schedule of the MF Regulations.
13.13. Investments in units of REITs / InvITs340
13.13.1. Any investment made by Mutual Funds and SIFs in REITs shall be
considered as investment in equity related instruments. In this regard,
AMCs shall issue an addendum to make necessary changes in the
340 SEBI Circular No. HO/24/13/12(1)2025-IMD-POD-2/I/157/2025 dated November 28, 2025
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scheme documents and the same shall not be considered as
fundamental attribute change for the scheme.
13.13.2. InvITs shall continue to be classified as hybrid instruments for the
purpose of investments by Mutual Funds and SIFs.
13.13.3. Existing investment in REITs held by debt schemes of Mutual Funds
and investment strategies of SIFs as on December 31, 2025, shall be
grandfathered. However, AMCs are encouraged to make efforts to
divest REITs from respective portfolios of debt schemes considering the
market conditions, liquidity and interest of investors.
13.13.4. Any inclusion of REITs in the equity indices shall be carried out only
after a period of six months i.e. July 01, 2026
13.13.5. Investment limits for investment by Mutual Fund Schemes in units of
InvITs:
Sr. No. Description Maximum Remarks
Investment
Limit for MF
Schemes
a) Investment by mutual 10% of units
fund under all its issued by a
schemes single issuer of
InvIT
b) Investment by a 10% of NAV of Such limits
mutual fund scheme MF scheme shall not be
in the units of InvITs applicable for
investments in
c) 5% of NAV of case of index
Investment by a MF scheme fund or sector
mutual fund scheme in or thematic
the units of InvIT scheme
issued by a single pertaining to
issuer InvIT.
13.13.6. Any existing scheme intending to invest in units of InvITs shall abide by
the provisions of Regulation 22 (9)(c), and unit holders of the scheme
shall be given a time period of at least 15 calendar days for the purpose
of exercising the exit option.
13.14. Inter Scheme Investments
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13.14.1. In terms of clause 3 of Sixth Schedule of MF Regulations, aggregate
inter-scheme investment made by all schemes of the Mutual Fund under
the same management or in schemes under the management of any
other AMC shall not exceed 5% of the NAV of the mutual fund.
13.15. Norms for investment and disclosure by Mutual Funds in derivatives
13.15.1. Writing of Options by Mutual Fund Schemes:
(a) Mutual funds shall not write options or purchase instruments with
embedded written options except for the covered call strategy.
(b) Mutual Funds shall write call options under a covered call strategy
as prescribed below:
(i) Mutual Fund schemes (except Index Funds and ETFs) may
write call options only under a covered call strategy for
constituent stocks of NIFTY 50 and BSE SENSEX subject to
the following:
(I) The total notional value (taking into account strike price
as well as premium value) of call options written by a
scheme shall not exceed 15% of the total market value
of equity shares held in that scheme. In case of any
passive breach, the respective scheme shall have 7
trading days to rebalance the portfolio. During the
rebalancing period, no additional call options can be
written in the said scheme.
(II) The total number of shares underlying the call options
written shall not exceed 30% of the unencumbered
shares of a particular company held in the scheme. The
unencumbered shares in a scheme shall mean shares
that are not part of Securities Lending and Borrowing
Mechanism (SLBM), margin or any other kind of
encumbrances.
(III) In case a Mutual Fund scheme needs to sell securities
on which a call option is written under a covered call
strategy, it shall ensure compliance with Paragraphs (I)
and (II) above while selling the securities.
(IV) In no case, a scheme shall write a call option without
holding the underlying equity shares. A call option can
be written only on shares which are not hedged using
other derivative contracts.
(V) The call option written shall be marked to market daily
and the respective gains or losses factored into the daily
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NAV of the respective scheme(s) until the position is
closed or expired.
(ii) For schemes intending to use covered call strategy, the risks
and benefit of the same, shall be disclosed in the SID.
(iii) Format for the purpose of uniform disclosure of investments
in derivative instruments by Mutual Funds in monthly portfolio
disclosure, annual report or in any other disclosures is
prescribed. Further, the call options written shall be disclosed
as per Format No. 7F.
(iv) For existing schemes, writing of call options shall be
permitted subject to appropriate disclosure and compliance
with Regulation 22(9)(c).
13.15.2. Hedging of Interest Rate Risk
(a) To reduce interest rate risk in a debt portfolio, mutual funds may
hedge the portfolio or part of the portfolio (including one or more
securities) on weighted average modified duration basis by using
Interest Rate Futures (IRFs). The maximum extent of short position
that may be taken in IRFs to hedge interest rate risk of the portfolio
or part of the portfolio, is as per the formula given below:
(Portfolio Modified Duration * Market Value of the Portfolio)
(Futures Modified Duration * Futures Price / PAR)
(b) In case the IRF used for hedging the interest rate risk has different
underlying security(s) than the existing position being hedged, it
would result in imperfect hedging.
(c) The basic characteristics of the scheme shall not be affected by
hedging the portfolio or part of the portfolio (including one or more
securities) based on the weighted average modified duration.
Explanation: In case of long term bond fund, after hedging the
portfolio based on the modified duration of the portfolio, the net
modified duration shall not be less than the minimum modified
duration of the portfolio as required to consider the fund as a long
term bond fund.
(d) The interest rate hedging of the portfolio shall be in the interest of
the investors.
(e) Mutual Fund schemes may imperfectly hedge their portfolio or part
of their portfolio using IRFs, subject to the following conditions:
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(i) Prior to commencement of imperfect hedging, the existing
schemes shall comply with the provisions of Regulation 22
(9)(c) and all unit holders shall be given a time-period of at
least 30 calendar days to exercise the option to exit at
prevailing NAV without charging of exit load.
(ii) The risks associated with imperfect hedging shall be
disclosed and explained by suitable numerical examples in
the offer documents and in the communication to investors in
terms of Regulation 22 (9)(c).
(f) Mutual Funds may enter into plain vanilla Interest Rate Swaps
(IRS) for hedging purposes. The value of the notional principal in
such cases shall not exceed the value of respective existing assets
being hedged by the scheme.
(g) In case participation in IRS is through over the counter
transactions, the counter party has to be an entity recognized as a
market maker by RBI and exposure to a single counterparty
scheme in such transactions shall not exceed 10% of the net
assets of the scheme. However, if mutual funds are transacting in
IRS through an electronic trading platform offered by the Clearing
Corporation of India Ltd (CCIL) and CCIL is the central
counterparty for such transactions guaranteeing settlement, the
single counterparty limit of 10% shall not be applicable.
13.15.3. Disclosure of Derivative Positions
Mutual funds shall make the following disclosures relating to the
derivative positions:
(a) Separately disclose the hedging positions through IRF (both
perfect and imperfect) in respective debt portfolios as per the
prescribed format341.
(b) Investment in interest rate derivatives (both IRS/IRF) shall also be
disclosed in the monthly portfolio disclosure in terms of Paragraph
6.1 of this Master Circular.
(c) Disclosure of the details of interest rate derivatives (both IRS/IRF)
used for hedging along with debt and money market securities
transacted on its website and also forwarded to AMFI as per
Paragraph 10.15 of this Master Circular.
13.16. Participation of mutual funds in Exchange Traded Commodity
Derivatives (ETCDs):
341 Please refer Format No. 4C & 7F under the section on formats.
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13.16.1. Mutual funds are permitted to participate in ETCDs in India, except in
commodity derivatives on ‘Sensitive Commodities’.
13.16.2. No Mutual fund scheme shall invest in physical goods except in
Gold/Silver through Gold/Silver ETFs. Further, as mutual fund schemes
participating in ETCDs may hold the underlying goods in case of
physical settlement of contracts, mutual funds shall dispose of such
goods from the books of the scheme, at the earliest, not exceeding the
timeline prescribed below:
(a) For Gold and Silver: - 180 calendar days from the date of holding
of physical goods,
(b) For other goods (except for Gold and Silver):
(i) By the immediate next expiry day of the same contract series
of the said commodity.
(ii) However, if Final Expiry Date (FED) of the goods falls before
the immediate next expiry day of the same contract series of
the said commodity, then within 30 calendar days from the
date of holding of physical goods.
13.16.3. No mutual fund scheme shall have net short positions in ETCDs on any
particular good, considering its positions in physical goods as well as
ETCDs, at any point of time.
13.16.4. Mutual funds are permitted to participate in ETCDs through the following
schemes:
(a) Gold/Silver ETFs
(b) Any other category of schemes as permitted under Part IV of
Chapter 3 of this Master Circular.
13.16.5. Prior to commencement of participation in ETCDs, the existing schemes
under the categories specified in Paragraph 13.16.4, except for
consequential changes in line with Paragraph 3.8.9, shall comply with
the provisions of Regulation 22(9)(c), as this will lead to change in
fundamental attributes of the scheme and all unitholders shall be given
a time period of at least 30 calendar days to exercise the option to exit
at prevailing NAV without charging of exit load, if any.
13.16.6. Prior to participation in ETCDs, the AMCs shall adhere to the following:
(a) Board of AMC shall ensure that person appointed to manage
investment shall have adequate expertise and experience in
managing such funds. However, appointment of dedicated fund
manager shall be optional.
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(b) Appoint a custodian registered with the Board for custody of the
underlying goods, arising due to physical settlement of contracts.
(c) Have written down investment policy for participation in ETCDs
approved by the Board of the AMC and the Board of Trustees.
(d) Have written down valuation policies approved by the Board of the
AMC and the Board of Trustees for valuation of commodity
derivatives and the underlying goods, arising due to physical
settlement of contracts. The approved valuation policies shall be
subject to the principles of fair valuation of the assets of mutual
fund schemes.
13.16.7. Mutual fund schemes may participate in the ETCDs as ‘clients’ and shall
be subject to all the rules, regulations and instructions, position limit
norms, etc. as may be applicable to clients, issued by the Board and
Exchanges from time to time. The position limits at mutual fund level
shall be as applicable to ‘Trading Members’.
13.16.8. Schemes investing in ETCDs shall be benchmarked against an
appropriate benchmark.
13.16.9. Investment Limits in ETCDs: Participation of mutual funds in ETCDs
shall be subject to the following investment limits:
Sl
No. Particular Investment limit Exceptions
(a) ETCDs of a Not exceeding 10% Not applicable for
particular good of NAV of the investments through
(Single) scheme Gold/Silver ETFs in
ETCDs having
gold/silver as
underlying.
(b) Multi Assets Not exceeding 30%
allocation of the NAV of the
schemes scheme
(c) Other Hybrid Not exceeding 10%
Schemes of NAV of the
excluding Multi scheme
Assets allocation
schemes
13.16.10. In case of mutual fund schemes investing in ETCDs, the AMC shall
adhere to the following:
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(a) The NAVs of those schemes shall be updated on each business
day by the AMCs on their website and on the website of AMFI by
09:00 a.m. of the following calendar day.
(b) The format of monthly portfolio shall be modified to reflect the
investment in ETCDs.
(c) The total exposure to ETCDs shall be disclosed as a line item in
the Monthly Cumulative Report (MCR) submitted by mutual funds.
13.17. Participation of Mutual Funds in Credit Default Swaps (CDS)342
13.17.1. Mutual Fund Schemes as buyer of CDS
(a) Schemes may buy CDS only for the purpose of hedging their credit
risk on debt securities they hold in various schemes. The exposure
to CDS shall not exceed respective debt security exposure, and
such exposure may not be added to gross exposure of the
scheme.
(b) In case the protected debt security is sold, schemes shall ensure
that the respective CDS position is closed within fifteen working
days of selling the above protected debt security.
(c) The exposure of any protected debt security, for determining single
issuer, group, sectoral limits and credit risk for various purposes
including Risk-o-meter and Potential Risk Class (PRC) matrix of
MF schemes, shall be considered as exposure to either issuer of
debt security (reference entity) or seller of CDS, whichever has
higher credit rating (lowest long term rating of instruments of seller
of CDS shall be considered for comparison).
(d) The exposure shall form part of overall single issuer limits for the
reference entity or seller of CDS, whichever is applicable.
(e) In case of same rating for reference entity and seller of CDS, the
exposure shall then be considered on reference entity and not on
seller of CDS.
(f) MF schemes shall buy CDS only from such sellers that have
instruments with lowest long-term rating of investment grade and
above.
(g) Schemes may buy CDS for investment grade and existing below
investment grade debt securities in the portfolio, if any.
13.17.2. Mutual Fund Schemes as seller of CDS
342 SEBI Circular No. SEBI/HO/IMD/PoD2/P/CIR/2024/125 dated September 20, 2024
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(a) MF Schemes may sell CDS only as part of investment in synthetic
debt securities, i.e., sell CDS on a reference obligation covered
with Cash/GSec/T-bills. Overnight and Liquid schemes shall not
sell CDS contracts.
(b) The following shall be ensured with respect to the cover:
(i) Cash, G-Sec and T-bills can act as cover. Government
securities with maturity within +/- 6 months of the maturity of
respective debt security (reference obligation) shall act as
cover and such cover may be used for maintaining margin
requirements on respective CDS.
(ii) The required amount of cover shall be enough to ensure that
notional amount does not exceed the value of cover kept,
which shall be calculated as follows:
(I) Notional amount in CDS sell contract (+)
(II) Buffer, for price fluctuations on government securities
kept as cover: The buffer shall be calculated to address
interest rate risk on government securities. The buffer
shall be at least equal to three times the daily haircut
applicable for the said G-sec instrument in case of repo
transactions on Clearing Corporation of India Limited.
(iii) The value of cover kept shall be reviewed on a daily basis.
(iv) The cover shall be earmarked to CDS sell position and can
be used for maintaining margin requirements on respective
CDS. However, investment in aforesaid instruments as cover
shall not be considered as part of Liquidity Ratio –
Redemption at Risk (LR-RaR) and Liquidity Ratio -
Conditional Redemption at Risk (LR-CRaR) eligible
instruments and shall not be sold or used for any other
purpose till CDS sell position is open.
(c) The exposure of synthetic debt security (notional amount) shall be
considered in respective single issuer, group issuer and sectoral
limits. Such exposure to the issuer, group and sector of the issuer
shall be equal to the notional amount.
(d) For the purpose of computing gross exposure of scheme investing
in synthetic debt security, the exposure due to such investment
shall be computed as follows:
(i) Notional amount (+)
(ii) Buffer (i.e., cover kept over and above notional amount)
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(e) Schemes shall sell CDS only against securities rated investment
grade and above.
(f) Credit risk rating of the synthetic debt security shall be same as of
reference obligation. For the purpose of Risk-o-meter, liquidity risk
value of the synthetic debt security shall be
Liquidity Risk Value of reference obligation + 2
(g) For Potential Risk Class (PRC) matrix, Credit Risk Value shall be
same as reference obligation.
(h) Debt Index funds and ETFs: Such schemes may also take
exposure through synthetic debt securities and the same may be
treated as replication as required under Paragraph 4.4.5 of this
Master Circular.
13.17.3. Other conditions
(a) Schemes shall comply with the directions issued by RBI from time
to time in this regard.
(b) Schemes shall participate in CDS only through standard contracts
prescribed by Fixed Income Money Market and Derivatives
Association of India (FIMMDA).
(c) All CDS contracts shall be transacted either through Central
Counterparty, if any or Request for Quote (RFQ) Platform.
(d) MFs shall ensure Two-way Credit Support Annex (CSA) as part of
CDS contracts.
(e) The following disclosures shall be made by schemes in their
periodic scheme portfolio disclosures:
(i) Credit Rating of CDS seller (lowest long term) where CDS is
bought by schemes.
(ii) CDS transactions with associate or group companies of
sponsor.
(f) CDS contract shall mature on or before winding up date of
schemes, wherever applicable.
(g) Exposure through CDS (Notional amount of both CDS bought and
sold) shall not exceed 10% of AUM of scheme and shall be within
the overall limit of derivatives exposure as prescribed in Scheme
Information Documents.
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(h) Valuation and Accounting: AMFI, in consultation with SEBI, has
issued guidelines for valuation and accounting of CDS by MF
schemes based on a waterfall approach, that may be as follows:
(i) Level I: Actual Traded levels
(ii) Level II: Corporate bond credit spreads
(i) The relevant changes in the SIDs, basis the provisions of this
section, shall not be considered as a “Fundamental Attribute
Change” of the scheme in terms of Regulation 22(9)(c).
13.18. Exposure Limits:
13.18.1. The cumulative gross exposure through equity, debt, derivative
positions (including commodity and fixed income derivatives), repo
transactions and credit default swaps in corporate debt securities,
Infrastructure Investment Trusts (InvITs), other permitted
securities/assets and such other securities/assets as may be permitted
by the Board from time to time shall not exceed 100% of the net assets
of the scheme.
13.18.2. Each position taken in derivatives shall have an associated exposure as
defined under. Exposure is the maximum possible loss that may occur
on a position. However, certain derivative positions may theoretically
have unlimited possible loss. Exposure in derivative positions shall be
computed as follows:
Position Exposure
Long Future Futures Price * Lot Size * Number
of Contracts
Short Future Futures Price * Lot Size * Number
of Contracts
Option bought Option Premium Paid * Lot Size *
Number of Contracts.
13.18.3. The total gross exposure related to option premium paid and received
shall not exceed 20% of the net assets of the scheme.
13.18.4. Derivative positions taken for hedging purposes in excess of the
underlying position against which the hedging position has been taken,
shall be treated under the limits mentioned in Paragraph 13.18.1 above.
Explanation: Hedging positions are the derivative positions that reduce
possible losses on an existing position in securities and till the existing
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position remains. Hedging positions cannot be taken for existing
derivative positions.
13.18.5. The portion of imperfect hedging using IRFs as per Item No. (d) under
Paragraph 13.18.6 in excess of 20% of the Net Assets of the Scheme
shall be considered as creating exposure and shall be included in the
computation of gross exposure in terms of Paragraph 13.18.1 above.
13.18.6. Exemptions from the gross exposure limits
Sl Exemption from gross exposure Additional conditions for exemption, if
No limit for exposure in any
(a) Cash or cash equivalents with NA
residual maturity of less than 91
calendar days
(b) Exposure due to hedging positions: (i) Hedging positions are not taken for
hedging position shall be exempted existing derivative positions;
from the exposure limits mentioned
(ii) Any derivative instrument used to
in Paragraph 13.18.1 above, subject
hedge has the same underlying
to the conditions mentioned
security as the existing position being
alongside.
hedged;
(iii) The quantity of underlying associated
with the derivative position taken for
hedging purposes does not exceed
the quantity of the existing position
against which hedge has been taken.
(c) The exposure on account of the call NA
option written under the
covered call strategy as mentioned
in Paragraph 13.15.1 above.
(d) Imperfect hedging using IRFs as per (i) Exposure to IRFs is created only for
Paragraph 13.15.2 up to maximum hedging the interest rate risk based
20% of the Net Assets of the on the weighted average modified
Scheme duration of the bond portfolio or part
of the portfolio.
(ii) The correlation between the portfolio
or part of the portfolio (excluding the
hedged portions, if any) and the IRF,
calculated for the past 90 calendar
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days is at least 0.9 at the time of
initiation of hedge. Any subsequent
deviation from the correlation criteria
shall be rebalanced within 5 working
days and if not rebalanced within the
timeline, the derivative positions
created for hedging shall be
considered under the gross exposure
computed in terms of Paragraph
13.18.1 above.
Explanation: If the fund manager
intends to do imperfect hedging up to
15% of the portfolio using IRFs on
weighted average modified duration
basis, either of the following
conditions need to be complied with
for the purpose of exemption from
gross exposure:
(I) The correlation for past 90 calendar
days between the portfolio and the
IRF is at least 0.9 or
(II) The correlation for past 90 days
between the part of the portfolio
(excluding the hedged portions, if
any) i.e. at least 15% of the net
asset of the scheme (including one
or more securities) and the IRF is at
least 0.9.
(iii) At no point of time, the net modified
duration of part of the portfolio being
hedged should be negative.
(e) Short position in Exchange Traded The mutual funds shall not write options,
Commodity Derivatives or purchase instruments with embedded
(ETCDs) not exceeding the holding written options in goods or on commodity
of the underlying goods futures.
received in physical settlement of
ETCD contracts
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(f) Short position in ETCDs not
exceeding the long position in
ETCDs on the same goods.
(g) CDS bought for the purpose of The exposure to CDS shall not exceed
hedging credit risk on debt respective debt security exposure.
securities
13.19. Inter Scheme Transfer of Securities (“IST”):
13.19.1. Transfers of securities from one scheme to another scheme in the same
mutual fund shall be allowed only if such transfers are done at the
prevailing market price for quoted instruments on spot basis (“spot
basis” shall have the same meaning as specified by stock exchange for
spot transactions) and the securities so transferred shall be in
conformity with the investment objective of the scheme to which such
transfer has been made.
13.19.2. In order to ensure that such ISTs of securities are in conformity with the
above objective, the following additional safeguards have been
prescribed:
(a) In case of Close Ended Schemes, IST purchases would be allowed
within 3 business days of allotment pursuant to NFO and
thereafter, no ISTs shall be permitted to/from Close Ended
Schemes.
(b) In case of Open Ended Schemes, ISTs may be allowed in the
following scenarios:
(i) For meeting liquidity requirement in a scheme in case of
unanticipated redemption pressure: AMCs shall have an
appropriate Liquidity Risk Management (LRM) Model at
scheme level, approved by trustees, to ensure that
reasonable liquidity requirements are adequately provided
for. Recourse to ISTs for managing liquidity shall only be
taken after the following avenues for raising liquidity have
been attempted and exhausted:
(I) Use of scheme cash & cash equivalent
(II) Use of market borrowing
(III) Selling of scheme securities in the market
(IV) After attempting all the above, if there is still a scheme
level liquidity deficit, then out of the remaining
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securities, outward ISTs of the optimal mix of low
duration paper with highest quality shall be effected.
The use of market borrowing before ISTs shall be
optional and Fund Manager may at his discretion take
decision on borrowing in the best interest of unitholders.
The option of market borrowing or selling of security as
mentioned at Paragraphs (II) & (III) above may be used
in any combination and not necessarily in the above
order. In case option of market borrowing and/or selling
of security is not used, the reason for the same shall be
recorded with evidence.
(ii) For Duration/Issuer/Group rebalancing:
(I) ISTs shall be allowed to rebalance the breach of
regulatory limit.
(II) ISTs can be done where duration/ issuer/ sector/ group
rebalancing is required in both the transferor and
transferee schemes. Different reasons cannot be cited
for transferor and transferee schemes except in case
where the transferee scheme is Credit Risk scheme.
(III) In order to guard against possible mis-use of ISTs in
Credit Risk scheme, trustees shall ensure to have a
mechanism in place to negatively impact the
performance incentives of Fund Managers, Chief
Investment Officers (CIOs), etc. involved in process of
ISTs in Credit Risk scheme, in case the security
becomes default grade after the ISTs within a period of
one year. Such negative impact on performance shall
mirror the existing mechanism for performance
incentives of the AMC.
(c) No ISTs of a security shall be allowed, if there is negative news or
rumours in the mainstream media or an alert is generated about
the security, based on internal credit risk assessment in terms of
Paragraph 5.4 of this Master Circular during the previous four
months.
(d) AMC shall ensure that Compliance Officer, CIO and Fund
Managers of transferor and transferee schemes have satisfied
themselves that ISTs undertaken are in compliance with the
regulatory requirements. Prescribed “Template” and documentary
evidence in this regard shall be maintained by the AMC for all ISTs.
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(e) If security gets downgraded following ISTs, within a period of four
months, Fund Manager of buying scheme has to provide detailed
justification /rationale to the trustees for buying such security.
13.20. Investment by Schemes of the Mutual fund in Pre-IPO placements343
13.20.1. In terms of Clause 1 of Sixth Schedule to MF Regulations, in case of
IPO of equity shares and equity related instruments, schemes of the
Mutual Funds can only participate in the Anchor investor portion or in
the public issue.
343 SEBI Letter No. SEBI/HO/IMD/IMD-SEC-4/P/OW/2025/27285/1 dated October 23, 2025
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CHAPTER 14: ADVERTISEMENTS344
14.1. In addition to the provisions of the Fifth Schedule, AMCs shall comply
with the following345:
14.1.1. While advertising IDCW payouts, all advertisements shall disclose the
IDCW declared or paid in rupees per unit along with the face value of
each unit of that scheme and the prevailing NAV at the time of
declaration of the IDCW.
14.1.2. Further, for IDCW payouts at maturity of closed-ended scheme(s)/ at
completion of the interval period of interval scheme(s), AMC shall
advertise that “the entire distributable surplus at the time of maturity or
at the completion of the interval period shall be distributed
14.1.3. Pay out of IDCW/ Bonus: While advertising pay outs, all advertisements
shall disclose, immediately below the pay-out figure (in percentage or in
absolute terms) that the NAV of the scheme, pursuant to pay out would
fall to the extent of payout and statutory levy (if applicable).
14.2. Disclosing performance related information in Mutual Fund
advertisements346
14.2.1. In performance advertisements of Mutual Fund schemes:
(a) Performance of the Mutual Fund scheme shall be advertised in
terms of CAGR at least for the past 1 year, 3 years, 5 years and
since inception.
(b) Point-to-point returns on a standard investment of Rs. 10,000/-
shall also be provided.
(c) Information based on period computed from the last day of month-
end preceding the date of advertisement, shall be provided.
(d) It shall be specifically mentioned whether performance so
disclosed, is of regular or direct plan of the Mutual Fund scheme
along-with a footnote mentioning that different plans have a
different expense structure.
(e) If a Mutual Fund scheme has not been managed by the same fund
manager for the full period of the information being published in
the advertisement, the same shall be disclosed in a footnote.
344 SEBI Circular No. Cir/IMD/DF/13/2011 dated August 22, 2011 and SEBI Circular No. Cir/IMD/DF/6/2012 dated February
28, 2012 and SEBI Circular No. SEBI/IMD/CIR No.1/64057/06 dated April 04, 2006, Refer SEBI email dated May 03, 2017,
Refer SEBI letter No. IMD/DF2/RS/2017/10751 dated May 12, 2017, Refer SEBI letter No. IMD/SEC4/OW/P/2023/9448/1
dated March 03, 2023
345 SEBI Circular No. Cir/IMD/DF/6/2012 dated February 28, 2012 and Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/024 dated
March 04, 2021, Refer SEBI email dated June 02, 2010
346 SEBI Circular No. Cir/IMD/DF/23/2017 dated March 15, 2017
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14.2.2. Where the scheme has been in existence for less than six months, past
performance shall not be provided. Further, if the scheme has been in
existence for more than six months but less than one year, then simple
annualized growth rate of the scheme for the past 6 months and since
inception from the last day of month-end preceding the date of
advertisement shall be provided347.
14.2.3. 348In case of Overnight funds, Liquid funds and Money Market funds,
wherein investors have very short investment horizon, the performance
can be advertised by simple annualisation of yields if a performance
figure is available for at least 7 calendar days, 15 calendar days and 30
calendar days provided it does not reflect an unrealistic or misleading
picture of the performance or future performance of the scheme.
14.2.4. For the sake of standardization, a similar return in INR and by way of
CAGR must be shown for the following apart from the scheme
benchmarks:
Sr. Category of Schemes Additional
No. Benchmark
1 All Equity Scheme Sensex/ Nifty
2 All Debt Schemes having duration 1-year T-Bill
/ maturity upto 1 year and Arbitrage
Funds
3 All Debt Schemes which are not 10 year dated GOI
covered in Point 2 Security
4 Conservative Hybrid Fund 10 year dated GOI
Security
5 Balanced Hybrid Fund / Sensex / Nifty
Aggressive Hybrid Fund / Dynamic
Asset Allocation/ Multi Asset
Allocation
6 Equity Savings 10 year dated GOI
Security
347 SEBI Circular No. Cir/IMD/DF/13/2011 dated August 22, 2011 and SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/024
dated March 04, 2021
348 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021
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7 Index Funds / ETFs & FoFs Appropriate
(Overseas/ Domestic) benchmark based on
the underlying asset
allocation as per
above
8 Retirement Fund / Children's Fund Sensex/Nifty
These disclosures shall form a part of the SAI and all advertisements
of Mutual Funds.
14.2.5. Any disclosure regarding quarterly/ half yearly/ yearly performance shall
pertain to respective calendar quarter/ half year/ year only.
14.2.6. 349When the performance of a particular Mutual Fund scheme is
advertised, the advertisement shall also include the performance data
of all the other schemes managed by the fund manager/s of that
particular scheme. Such performance data of the other schemes
managed by the fund manager shall be provided as follows:
(a) Performance of other schemes managed by the fund manager,
along-with their respective scheme’s benchmark, shall be provided
in terms of CAGR for a period of 1 year, 3 years and 5 years. The
period referred here shall be computed in the same manner as that
of the scheme being advertised.
(b) In case the number of schemes managed by a fund manager is
more than six, then the AMC shall disclose the total number of
schemes managed by that fund manager along with the
performance data of top 3 and bottom 3 schemes (in addition to
the performance data of the scheme for which the advertisement
is being made) managed by that fund manager in all
performance related advertisements. However, in such cases,
AMCs shall ensure that true and fair view of the performance of
the fund manager is communicated by providing additional
disclosures, if required.
(c) If a Mutual Fund scheme has not been managed by the same fund
manager for the full period of information being published in the
advertisement, the same shall be disclosed in a footnote.
(d) For digital (internet-enabled media) advertisement, Mutual Funds
shall provide an exact website link to such summarized
349 SEBI Circular No. Cir/IMD/DF/23/2017 dated March 15, 2017
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performance of other schemes managed by the same fund
manager.
(e) An indicative format for disclosure of performance of other
schemes managed by the concerned fund manager is provided
under Format No. 7A.
14.3. Disclosure of Performance of Schemes post-merger350:
14.3.1. Disclosure of performance of schemes post-merger shall be as given
below
(a) When two schemes, for example, Scheme A (Transferor Scheme)
& Scheme B (Transferee Scheme), having similar features, get
merged and the merged scheme i.e., surviving scheme also has
the same features, the weighted average performance of both the
schemes needs to be disclosed.
(b) When Scheme A (Transferor Scheme) gets merged into Scheme
B (Transferee Scheme) and the features of Scheme A/ Scheme B
are retained, the performance of the scheme whose features are
retained needs to be disclosed.
(c) When Scheme A (Transferor Scheme) gets merged with Scheme
B (Transferee Scheme) and a new scheme, Scheme C emerges
after such consolidation or merger of schemes, the past
performance need not be provided.
14.3.2. In addition to disclosing the performance of the scheme as mentioned
above, past performance of such scheme(s) whose features are not
retained post-merger may also be made available on request with
adequate disclaimer.
14.4. Indicative portfolios and yields in mutual funds schemes351
14.4.1. Mutual Funds, AMCs and distributors shall not offer any indicative
portfolio and indicative yield, and no communication in this regard in any
manner whatsoever shall be issued. The compliance of the same shall
be monitored by the AMC and Trustees of Mutual Funds and reported
in their respective reports to the Board.
14.5. Indicative portfolio or yield in close ended debt oriented mutual fund
schemes352
350 SEBI Circular No- SEBI/HO/IMD/DF3/CIR/P/2018/69 dated April 12, 2018
351 SEBI Circular No. IMD/CIR No. 14/151044/09 dated January 19, 2009
352 SEBI Circular No. CIR/IMD/DF/12/2011 dated August 01, 2011
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14.5.1. Mutual Funds /AMCs shall make following additional disclosures in the
SID/SAI and KIM without indicating the portfolio or yield, directly or
indirectly:
(a) credit evaluation policy for the investments in debt securities.
(b) the list of sectors they would not be investing.
(c) the type of instruments which the schemes propose to invest viz.
CPs, CDs, Treasury bills etc.
(d) the floors and ceilings within a range of 5% of the intended
allocation (in %) against each sub asset class/credit rating. For
example, it may be disclosed that x-y % would be in AAA rated
bank CD as per the sample matrix below:
14.6. After the closure of NFO, the AMCs shall report in the next meeting of AMCs
and Trustees the publicized percentage allocation and the final portfolio.
Variations between indicative portfolio allocation and final portfolio shall not
be permissible.
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CHAPTER 15: INVESTOR RIGHTS & OBLIGATIONS
15.1. Allotment of units and refund
15.1.1. In terms of Regulation 34, the AMC shall issue a statement of accounts
specifying the number of units allotted to the applicant or issue units in
the dematerialized form on immediate basis but not later than 5 working
days from the date of closure of the initial subscription list or from the
date of receipt of the application.
15.1.2. On receipt of request from the unit holder, the AMC shall issue units in
dematerialized form to a unit holder in a scheme within 2 working days.
15.1.3. Any amount to be refunded to the applicants under Regulation 32(3)
shall be refunded within a period of 5 working days from the date of
closure of subscription list.
15.1.4. In the event of failure to refund the amounts within five working days,
the AMC shall be liable to pay interest to the applicants at a rate of 15%
per annum from the expiry of five working days from the date of closure
of the subscription list.
15.2. Transfer of units
15.2.1. In terms of Regulation 35(3), the AMC shall, on production of instrument
of transfer together with relevant unit certificates, register the transfer
and return the unit certificate to the transferee within 30 calendar days
from the date of such production.
15.3. Transfer of Redemption or Repurchase Proceeds353
15.3.1. The transfer of redemption or repurchase proceeds to the unitholders
shall be made within 3 working days from the date of redemption or
repurchase.
15.3.2. For schemes investing at least 80% of total assets in permissible
overseas investments as per Paragraph 13.11.1, the transfer of
redemption or repurchase proceeds to the unitholders shall be made
within 5 working days form the date of redemption or repurchase.
15.3.3. AMFI, in consultation with the Board, has published a list of exceptional
circumstances for schemes unable to transfer redemption or repurchase
proceeds to investors within time as stipulated at Paragraph 15.3.1 and
15.3.2 above, along with applicable time frame for transfer of
redemption or repurchase proceeds to the unitholders in such
exceptional circumstances. The said list is available on AMFI website.
353 SEBI Circular No. SEBI/HO/IMD/IMD-I DOF2/P/CIR/2022/161 dated November 25, 2022
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15.3.4. AMCs shall ensure that redemption payout is made to all investors
uniformly on a single day, within prescribed timelines, subsequent to
receipt of valid redemption requests. Additionally, AMCs shall ensure
there is no early payouts made during processing of redemption
requests on the basis of early payout requests of few investors354.
15.4. Payment of interest for delay in dispatch of redemption and/or
repurchase proceeds and/or IDCW355
15.4.1. In the event of failure to transfer redemption or repurchase proceeds
within 3 working days356 from the date of receipt of such requests and/
or pay out of IDCW within the stipulated 7 working days357 period358,
interest for the period of delay in transfer of redemption or repurchase
or IDCW shall be payable to unitholders at the rate of 15% per annum
along with the proceeds of redemption or repurchase or IDCW, as the
case may be. Such Interest shall be borne by AMCs.
15.4.2. The details of such payments shall be sent to the Board as part of CTR.
Investors shall also be informed about the rate and amount of interest
paid to them.
15.5. Unclaimed Redemption and IDCW Amount359
15.5.1. 360The unclaimed redemption and IDCW amounts may be:
(a) deployed in call money market or money market instruments
(b) invested in a separate plan of Overnight scheme / Liquid scheme/
Money Market Mutual Fund scheme floated by Mutual Funds
specifically for deployment of the unclaimed amounts, provided
such schemes are placed in A-1 cell (Relatively Low Interest Rate
Risk and Relatively Low Credit Risk) of Potential Risk Class matrix.
15.5.2. AMCs shall not be permitted to charge any exit load in this plan and
BER of such plan shall be capped as per the BER of direct plan of such
scheme or at 50 bps, whichever is lower.
15.5.3. Further, for the Unclaimed redemption and IDCW amounts deployed by
Mutual Funds in Call Money Market or Money Market instruments, the
investment management and advisory fee charged by the AMC for
managing unclaimed amounts shall not exceed 50 bps.
354 SEBI Letter to AMFI dated September 30, 2024
355 SEBI Circular No. SEBI/HO/IMD/IMD-I DOF2/P/CIR/2022/161 dated November 25, 2022 & SEBI Circular No.
SEBI/MFD/CIR/2/266/2000 dated May 19, 2000.
356 SEBI Circular No. SEBI/HO/IMD/IMD-I DOF2/P/CIR/2022/161 dated November 25, 2022
357 SEBI Circular No. SEBI/HO/IMD/IMD-I DOF2/P/CIR/2022/161 dated November 25, 2022
358 Regulation 53(a), SEBI Circular No. SEBI / IMD / CIR No 14 / 187175/ 2009 dated December 15,2009
359 SEBI Circular No. MFD/CIR/9/120/2000 dated November 24, 2000 & SEBI/HO/IMD/DF2/CIR/P/2016/37 dated February 25,
2016
360 SEBI Circular No. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2021/608 dated July 30, 2021
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15.5.4. 361AMCs shall adhere to the following uniform practices regarding
treatment of unclaimed redemption and IDCW amounts and any income
earned thereon:
(a) AMCs shall transfer the unclaimed redemption and IDCW amounts
to Unclaimed Dividend and Redemption Scheme (UDRS) after 90
calendar days and not beyond 105 calendar days from the date of
issuance of the instruments.
(b) AMCs shall have separate scheme/plan for Unclaimed IDCW and
Unclaimed Redemption amount, pending for less than 3 years and
for more than 3 years.
(c) On completion of first 3 years' period, AMCs shall transfer such
units to UDRS plan (>3 years) within 10 business days of
subsequent month.
(d) The amount of income accrued on daily basis on unclaimed
amounts beyond three years shall be transferred on a monthly
basis (i.e. on or before 10th calendar day of subsequent month) to
the investor education scheme / folio.
15.5.5. Investors who claim the unclaimed amounts during a period of 3 years
from the due date shall be paid initial unclaimed amount along with the
income earned on its deployment. Investors, who claim these amounts
after 3 years, shall be paid initial unclaimed amount along with the
income earned on its deployment till the end of the third year. After the
3rd year, the income earned on such unclaimed amounts shall be used
for the purpose of investor education.
15.5.6. The AMC shall make continuous efforts to remind the investors through
letters to claim their unclaimed amounts.
15.5.7. Further, to ensure Mutual Funds play a pro-active role in tracing the
rightful owner of the unclaimed amounts:
(a) AMCs shall provide on their website, the list of names and
addresses of investors in whose folios there are unclaimed
amounts.
(b) AMFI shall also provide on its website, the consolidated list of
investors across Mutual Fund industry, in whose folios there are
unclaimed amounts including the name of investor, address of
investor and name of Mutual Fund(s) with whom unclaimed
amount lies.
361 SEBI letter to AMFI dated January 22, 2025
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(c) Information at Paragraph (a) & (b) above may be obtained by
investor only upon providing his appropriate credentials (like PAN,
date of birth, etc.) along with adequate security control measures
being put in place by Mutual Fund / AMFI.
(d) The website of Mutual Funds and AMFI shall also provide
information on the process of claiming the unclaimed amount and
the necessary forms / documents required for the same.
(e) Further, the information on unclaimed amount along with its
prevailing value (based on income earned on deployment of such
unclaimed amount), shall be separately disclosed to investors
through the periodic SOA / CAS sent to the investors.
15.5.8. Disclosures on above provisions shall be made in the SAI /SID.
Additionally, disclosure on the unclaimed amounts and the number of
such investors for each scheme shall be made in the Annual Report362.
15.6. Service platform for investors to trace inactive and unclaimed Mutual
Fund folios- MITRA (Mutual Fund Investment Tracing and Retrieval
Assistant)363
15.6.1. MITRA platform is developed by the RTAs to provide investors with a
searchable database of inactive and unclaimed Mutual Fund folios at an
industry-level which shall empower the investors in following manner:
(a) Enable investors to identify the overlooked investments or any
investments made by any other person for which he/she may be
rightful legal claimant.
(b) Encourage investors to do KYC as per the current norms thus
reducing the number of non-KYC compliant folios.
(c) Reduction in the unclaimed Mutual Fund folios.
(d) Contribute towards building a transparent financial ecosystem and
will be reliable medium for investors to find their inactive and
unclaimed MF investments.
(e) Build and incorporate mitigants against fraud risk.
15.6.2. An inactive folio shall be defined as “Mutual Fund Folio(s) where no
investor initiated transaction/s (financial and non-financial) have taken
place in the last 10 years but unit balance is available”. Thus, the
inactive folios will include those folios where the investor might have
remained invested in an open ended scheme and has either chosen not
to redeem or simply might have lost track of the investment. There is no
362 Please refer to Schedule IX of SEBI (Mutual Funds) Regulations, 2026
363 SEBI Circular No. SEBI/HO/IMD/IMD-SEC-3/P/CIR/2025/15 dated February 12, 2025
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consequence for those folios appearing in the platform where the
unitholder is aware of the investment and has chosen to remain
invested. The objective of the platform is to encourage the investors to
search for forgotten MF investments and update KYC as per the current
norms.
15.6.3. The MITRA platform has been hosted jointly by the two Qualified RTAs
(QRTAs) viz. Computer Age Management Services Limited (CAMS) and
KFIN Technologies Limited as agents of AMCs and available through a
link on the website of MF Central, AMCs, AMFI, the two QRTAs and the
Board.
15.6.4. The cyber security and cyber resilience framework as applicable to
QRTAs in terms of this Master Circular shall be applicable to the MITRA
platform.
15.6.5. The QRTAs are jointly and severally responsible for compliance with all
the applicable regulations including system audit and cyber security
audit. Further, the QRTAs shall ensure that the platform complies with
the guidelines for Business Continuity Plan (BCP) and Disaster
Recovery (DR) specified by the Board from time to time to MIIs.
15.6.6. AMCs, QRTAs, RIAs, AMFI and Mutual Fund Distributors are advised
to create awareness about this initiative amongst the investors.
15.7. Dispatch of Statement of Accounts (SOA)364
15.7.1. AMCs shall allot the units to the applicant whose application has been
accepted and also send confirmation specifying the number of units
allotted to the applicant by way of email and/or SMS to the applicant’s
registered email address and/or mobile number as soon as possible but
not later than 5 working days from the date of closure of the initial
subscription list and/or from the date of receipt of the request from the
unitholders.
15.7.2. Option to hold units in demat form365
(a) Mutual Funds/AMCs shall provide an option to the investors to
mention demat account details in the subscription form, in case
they desire to hold units in demat form while subscribing to any
scheme.
(b) Mutual Funds/AMCs are advised to obtain ISIN for each option of
the scheme and quote the respective ISIN along with the name of
the scheme, in all SOA/CAS issued to the investors.
364 SEBI Circular No. MFD/CIR/9/120/2000 dated November 24, 2000, SEBI Circular No. IMD/CIR/12/80083/2006 dated
November 20, 2006 and SEBI Circular No. Cir/IMD/DF/16/2011 dated September 08, 2011
365 SEBI circular no. CIR/IMD/DF/9/2011, dated May 19, 2011
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15.7.3. Dematerialization of existing units held by investors
(a) In case investors desire to convert their existing physical units
(represented by SOA) into dematerialized form, mutual funds /
AMCs shall take such steps in coordination with RTAs,
Depositories and Depository participants (DPs) to facilitate the
same.
(b) Where investor desires to hold units in dematerialised form, demat
statement given by depository participant shall be deemed to be
adequate compliance with requirements for account statement
prescribed by the Board.
15.7.4. Consolidated Account Statement (CAS)366
(a) AMCs shall ensure that the consolidated account statement for
each calendar month, is issued367 on or before 15th day of the
succeeding month.
(b) 368The AMC shall ensure that the CAS for the half year is issued
on or before 21st day of the succeeding month.
(c) Further, AMCs shall adhere to the CAS and electronic CAS (e-
CAS) related timelines, as specified by the Board from time to
time.369
(d) Each CAS issued to the investors shall also provide the total
purchase value / cost of investment in each scheme.
(e) Further, CAS issued for the half-year (ended September/ March)
shall also provide.
(i) The amount of actual commission paid by AMCs/MFs to
distributors (in absolute terms) during the half-year period
against the concerned investor’s total investments in each
MF scheme. The term ‘commission’ here refers to all direct
monetary payments and other payments made in the form of
gifts / rewards, trips, event sponsorships etc. by AMCs/MFs
to distributors. Further, a mention may be made in such CAS
indicating that the commission disclosed is gross
commission and does not exclude costs incurred by
distributors such as taxes (wherever applicable, as per
existing rates), operating expenses, etc.
366 SEBI Circular No. Cir/IMD/DF/16/2011 dated September 08, 2011, SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2016/42
dated March 18, 2016 and SEBI/HO/IMD/DF2/CIR/P/2016/89 dated September 20, 2016, SEBI/HO/MRD-
PoD2/CIR/P/2024/93 dated July 01, 2024, SEBI/HO/MRD/PoD1/CIR/P/2025/16 dated February 14, 2025
367 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021
368 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021
369 Refer SEBI Circular No. SEBI/HO/MRD/PoD1/CIR/P/2025/16 dated February 14, 2025 and Master Circular for Depositories.
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(ii) The scheme’s average TER370 (in percentage terms) along
with the break up between Investment and Advisory fees,
Commission paid to the distributor and Other expenses for
the period for each scheme’s applicable plan (regular or
direct or both) where the concerned investor has actually
invested in.”
(iii) Trustees and AMCs shall ensure compliance of the
provisions mentioned at Paragraph (ii) above and trustees
shall confirm the same to the Board in the HYTR.
(f) Such half-yearly CAS shall be issued to all MF investors, excluding
those investors who do not have any holdings in MF schemes and
where no commission against their investment has been paid to
distributors, during the concerned half-year period.
(g) Further, an indicative format (i.e. Format No. 4F), as provided
under providing guidance on the key components which shall be
reflected in half-yearly CAS may be referred.
15.8. Treatment and disposal of illiquid securities or securities classified as
default at the time of maturity / closure of schemes371 372
15.8.1. In case of close-ended schemes, some of the investments made by
Mutual Fund schemes may become default at the time of maturity of
schemes. Further, at the time of winding up of a scheme, some of the
investments made by Mutual Funds may become default or illiquid. In
due course of time i.e. after the maturity or winding up of the schemes,
such investments may be realised by the Mutual Funds. AMC shall
distribute such amount, if it is substantial, to the concerned investors. In
case the amount is not substantial, it may be used for the purpose of
investor education. The decision as to the determination of substantial
amount shall be taken by the Trustees of Mutual Funds after considering
the relevant factors including number of investors, amount recovered,
cost of transferring funds to investors, among others.
15.9. Change of Mutual Fund Distributor373
15.9.1. In case an investor wishes to change his distributor or wishes to go
direct, Mutual Funds/AMCs shall ensure compliance with the instruction
of the investor informing his/her desire to change his/her distributor and
/ or go direct, without compelling that investor to obtain a ‘No Objection
Certificate’ from the existing distributor374.
370 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2018/137 dated October 22, 2018
371 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019
372 SEBI Circular No. MFD/CIR/05/432/2002 dated June 20, 2002.
373 Refer SEBI email dated August 12, 2010
374 SEBI Circular No -SEBI/IMD/CIR No./ 13/187052 /2009 December 11, 2009
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15.10. Additional mode of payment through Applications Supported by
Blocked Amount (ASBA) in Mutual Funds375
15.10.1. In addition to the permissible modes of payment, ASBA facility shall also
be available to the investors subscribing to New Fund Offers (NFOs) of
mutual fund schemes.
15.10.2. The banks which are in Board’s list shall extend the ASBA facility in case
of NFOs of MF schemes to all eligible investors in MF units.
15.10.3. AMCs shall ensure that adequate arrangements are made by RTAs for
the implementation of ASBA. Mutual Funds/AMCs shall make all
relevant disclosures in this regard in the SAI.
15.10.4. SEBI circulars376 related to ASBA, issued from time to time, shall be
followed to the extent applicable.
15.10.5. The Mutual Funds/AMCs have to compulsorily provide ASBA facility to
the investors for all NFOs launched.
15.11. Instant Access Facility (IAF)377
15.11.1. IAF facilitates credit of redemption proceeds in the bank account of the
investor on the same day of redemption request. MFs/AMCs may offer
IAF subject to the following conditions:
(a) Eligibility378 - IAF shall be allowed through online mechanism in
Overnight and Liquid Schemes of the MF only for resident
individual investors.
(b) Applicability
(i) NAV: While observing the extant cut-off timings with respect
to repurchase (i.e. Redemption), under IAF the following
NAVs shall be applied:
(I) where the IAF application is received up to 3.00pm–the
lower of (i) NAV of previous calendar day and (ii) NAV
of calendar day on which application is received;
(II) where the IAF application is received after 3.00 pm –the
lower of (i) NAV of calendar day on which such
application is received, and (ii) NAV of the next calendar
day.
375 SEBI Circular No. SEBI/IMD/CIR No 18 / 198647 /2010 dated March 15, 2010
376 SEBI Circular No. SEBI/CFD/DIL/DIP/31/2008/30/7 dated July 30, 2008, SEBI/CFD/DIL/2008/25/09dated September
SEBI/CFD/DIL/MB/IS/5/2009/05/08 dated August 25, 5, 2008, 2009 and SEBI/CFD/DIL/ASBA/1/2009/30/12 dated December
30, 2009 and CIR/CFD/DIL/7/2010 dated July 13, 2010, Cir / IMD / DF / 6 / 2010 dated July 28, 2010
377 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2017/39 dated May 08, 2017
378 SEBI Circular No. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2021/608 dated July 30, 2021
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(ii) Monetary Limit-The monetary limit under IAF shall be INR
50,000/-or 90% of latest value of investment in the scheme,
whichever is lower. This limit shall be applicable per day per
scheme per investor.
(c) Liquidity
(i) Liquidity for IAF shall be provided out of the available funds
with the scheme and MFs/ AMCs shall put in place a
mechanism so that adequate balance is available in the bank
account of the scheme to meet liquidity/ redemption
requirements under IAF. Such mechanism may be based on
historical trends of instant access. For example, AMCs
offering IAF may set aside in cash at least 3 times of the
higher of, last one month’s or three month’s daily average of
redemptions under instant access on a rolling day basis.
AMCs shall also lay down robust processes for continuous
monitoring and for funding the redemptions under the IAF.
(ii) MFs/ AMCs shall not borrow to meet the redemption
requirements under IAF.
(d) Disclosures
(i) AMCs shall make appropriate disclosures in the scheme
related documents about IAF and ensure that no mis-selling
is done on the pretext of instant availability of funds to the
investors.
(ii) Appropriate disclosures shall be made to the investors
mentioning the scenarios under which IAF may be
suspended and that IAF request would be processed as a
normal redemption request in such circumstances.
(e) Approvals and Controls
(i) MFs/ AMCs shall offer IAF only after obtaining approvals from
the AMC Board and the Trustees and keep in place
adequate safeguards in the system to implement this facility.
(ii) IAF shall also be considered while carrying out stress testing
of the schemes.
15.12. Use of e-wallet for investment in MFs379
15.12.1. MFs/AMCs may accept investment by an investor through e-wallets
(Prepaid Payment Instruments (PPIs)) subject to the following:
379 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2017/39 dated May 08, 2017
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(a) MFs/ AMCs shall ensure that extant MF Regulations such as cut-
off timings, time stamping, etc., are complied with for investment
in MFs using e-wallets.
(b) MFs/ AMCs shall enter into an agreement / arrangement with
issuers of PPIs for facilitating payment from e-wallets to MF
schemes.
(c) Redemption proceeds shall be made only to the bank account of
the investor/ unit holder.
(d) MFs/ AMCs shall ensure that total subscription through e-wallets
for an investor is restricted to INR 50,000/- per MF per financial
year. Further, the limit of INR 50,000/- would be an umbrella limit
for investments by an investor through both e-wallet and/or cash,
per Mutual Fund per financial year.
(e) In context of e-wallets, it shall be ensured that all e-wallets are fully
compliant with KYC norms as prescribed by RBI380.
(f) MFs/ AMCs shall ensure that e-wallet issuers shall not offer any
incentives such as cashback, vouchers, etc., directly or indirectly
for investing in MF schemes.
(g) MFs/ AMCs shall ensure that only amounts loaded into e-wallet
through cash or debit card or net banking, can be used for
subscription to MF schemes.
(h) MFs/ AMCs shall ensure that amount loaded into e-wallet through
credit card, cash back, promotional scheme etc. shall not be
allowed for subscription to MF schemes.
(i) MFs/ AMCs shall also comply with the requirement of no third party
payment norm for investment made using e-wallets.
15.13. Process for Investments made in the name of a Minor through a
Guardian381
15.13.1. Payment for investment by any mode shall be accepted from the bank
account of the minor, parent or legal guardian of the minor, or from a
joint account of the minor with parent or legal guardian. For existing
folios, the AMCs shall insist upon a change of Pay-out bank mandate
before redemption is processed382.
380SEBI Circular No. SEBI/HO/IMD/IMD-PoD-2/P/CIR/2023/40 dated March 23, 2023,
381 SEBI Circular No. SEBI/HO/IMD/DF3/CIR/P/2019/166 dated December 24, 2019. Refer SEBI letter No. SEBI/HO/IMD/IMD-
POD-I/P/OW/2023/51245/1 dated December 19, 2023
382 Substituted by SEBI Circular No. SEBI/HO/IMD/POD-II/CIR/P/2023/0069 dated May 12, 2023. Prior to substitution, clause
15.11.1 read as under:
“Payment for investment by means of Cheque, Demand Draft or any other mode shall be accepted from the bank account of
the minor or from a joint account of the minor with the guardian only. For existing folios, the AMCs shall insist upon a Change
of Pay-out Bank mandate before redemption is processed.”
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15.13.2. Irrespective of the source of payment for subscription, all redemption
proceeds shall be credited only in the verified bank account of the minor,
i.e. the account the minor may hold with parent/legal guardian after
completing all KYC formalities383.
15.13.3. Upon the minor attaining the status of major, the minor in whose name
the investment was made, shall be required to provide all the KYC
details, updated bank account details including cancelled original
cheque leaf of the new account. No further transactions shall be allowed
till the status of the minor is changed to major.
15.13.4. AMCs shall build a system control at the account set up stage of SIP,
STP and SWP on the basis of which, the standing instruction is
suspended when the minor attains majority, till the status is changed to
major.
15.14. Nomination for Mutual Fund unit holders384
15.14.1. Investors subscribing to mutual fund units385, shall have choice of:
(a) Providing nomination
(b) Opting out of nomination through a signed declaration form as
provided in Format No. 9F.
15.14.2. AMC shall provide an option to the unit holder(s) to submit either the
nomination form or the declaration form for opting out of nomination in
physical or online as per the choice of the unit holder(s). In case of
physical option, the forms shall carry the wet signature of all the unit
holder(s). In case of online option, instead of wet signature(s) of all the
unit holder(s), AMCs shall validate the forms:
(a) Using e-Sign facility recognized under Information Technology Act,
2000; or
(b) Through two factor authentication (2FA) in which one of the factor
shall be a One-Time Password sent to the unit holder at his/her
email/phone number registered with the AMC.
15.14.3. All AMCs shall ensure that adequate systems are in place for providing
the e-Sign facility and take all necessary steps to maintain confidentiality
and safety of client records.
383 Inserted vide SEBI Circular No. SEBI/HO/IMD/POD-II/CIR/P/2023/0069 dated May 12, 2023.
384 SEBI circular no. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2022/82 dated June 15, 2022, SEBI Circular No.
SEBI/HO/OIAE/OIAE_IAD-3/P/ON/2025/01650 dated January 10, 2025, SEBI Circular No. SEBI/HO/OIAE/OIAE_IAD-
3/P/ON/2025/0027 dated February 28, 2025, SEBI Circular No. SEBI/HO/OIAE/OIAE_IAD-3/P/CIR/2025/110 dated July 30,
2025, SEBI Circular No. HO/42/36/12(4)2025-OIAE-IAD3 dated December11, 2025
385 SEBI circular no. SEBI/HO/IMD/IMD-I DOF1/P/CIR/2022/105 July 29, 2022
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15.14.4. All the AMCs were advised to set deadline as June 30, 2024386 for
nomination / opting out of nomination for all the existing individual unit
holder(s) holding mutual fund units as mentioned at Paragraph 15.14.1
above, failing which the folios shall be frozen for debits. The said
requirement shall be optional for jointly held Mutual Fund folios387.
15.14.5. Further, AMCs and RTAs shall encourage the unit holder(s) to fulfil the
requirement for nomination/ opting out of nomination by sending a
communication on fortnightly basis by way of emails and SMS to all such
unit holder(s) who are not in compliance with the requirement of
nomination. The communication shall provide guidance by which the
unit holder(s) can provide nomination or opt out of nomination388.
15.15. Process for transmission of Units389
15.15.1. AMCs shall implement image based processing wherever the claimant
is a nominee or a joint holder in the investor folio, to improve the
processing turnaround time for transmission requests.
15.15.2. AMCs shall have a dedicated, Central Help Desk and a webpage
carrying relevant information and instructions in order to provide
assistance on the transmission process.
15.15.3. AMCs shall adopt a common Transmission Request Form (common
fields) and NOC form. All such forms and formats shall be made
available on the website of the AMCs, RTAs and AMFI.
15.15.4. AMCs shall implement a common set of document requirements for
transmission of units to claimant who are nominees or joint holders in
the investor account.
15.15.5. AMCs shall implement a uniform process for treatment of unclaimed
funds to be transferred to the claimant including the unclaimed dividend.
15.15.6. AMCs shall not accept requests for redemption from a claimant pending
completion of the transmission of units in his / her favor.
15.15.7. The Stamp duty payable by the claimant with respect to the indemnity
bond and affidavit, shall be in accordance with the stamp duty
prescribed by law.
15.15.8. AMCs and AMFI shall promote the importance of nomination as a part
of its investor education and awareness programmes.
386 SEBI Circular No. SEBI/HO/MIRSD/POD-1/P/CIR/2023/193 dated December 27, 2023, SEBI/HO/IMD/IMD-I
POD1/P/CIR/2023/160 dated September 27 & 2023 SEBI Circular No. SEBI/HO/IMD/IMD-I POD1/P/CIR/2023/47 dated March
28, 2023
387 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/29 dated April 30, 2024
388 SEBI Circular No. SEBI/HO/IMD/IMD-I POD1/P/CIR/2023/47 dated March 28, 2023
389 SEBI Circular No. SEBI/HO/IMD/DF3/CIR/P/2019/166 dated December 24, 2019. Refer SEBI letter No. SEBI/HO/IMD/IMD-
POD-I/P/OW/2023/51245/1 dated December 19, 2023
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15.15.9. AMFI has been advised to prescribe the forms and formats referred in
Paragraph 15.15.3 common set of documents referred in Paragraph
15.15.4 and uniform process for treatment of unclaimed funds referred
in Paragraph 15.15.5 and the same shall mandatorily be followed by all
Mutual Funds/AMCs.
15.16. Mandatory mentioning of PAN 390
15.16.1. For the requirement of mentioning PAN by investors of mutual fund
schemes, the applicable guidelines issued by the Board may be
referred391.
15.17. Mandatory mentioning of Bank Account by Investors392
15.17.1. It shall be mandatory for the investors of the Mutual Funds schemes to
mention their bank account numbers in their applications/request for
redemption. For this purposes Mutual Funds/AMCs shall provide space
in applications and redemption request forms.
15.18. SEBI Investors Education Programme – Investments in Mutual Funds393
15.18.1. SEBI has prepared a list of Frequently Asked Questions (FAQs)
explaining the fundamental issues pertaining to mutual funds. The same
is available on SEBI website http://www.sebi.gov.in under the "FAQs"
section. The details for accessing the same are enclosed at Annexure
9.
15.18.2. AMCs shall circulate copies of the brochure among their distributors and
agents (including brokers, banks, post offices) and the investors.
15.18.3. AMCs may publish the same as small booklets. In such a case, while
the booklets shall bear SEBI name and logo, AMC may give their name
as publisher. This may also be displayed prominently on their websites.
15.18.4. AMFI may consider including the FAQs as a part of study material for
their training programmes for investors and for their certification
programme conducted for agents and distributors.
15.18.5. SEBI may be kept informed about the steps taken by the AMCs in this
regard from time to time.
390 SEBI Circular No. MRD/DoP/Cir-05/2007 dated April 27, 2007, SEBI Circular No. MRD/DoP/Cir-08/2007 dated June 25,
2007, SEBI Circular No. MRD/DoP/MF/Cir-08/2008 dated April 3, 2008, SEBI Circular No. MRD/DoP/Cir-20/2008 dated June
30, 2008, Refer SEBI Letter No. MRD/Policy/PAN/AT/97151/2007 dated June 25, 2007, Refer SEBI letter No.
SEBI/HO/IMD/DF2/OW/P/2016/6768/1 dated March 08, 2016, Refer SEBI letter No. IMD/DF2/MSD/OW/P/2016/ 20426/1
dated July 20, 2016, Refer SEBI letter No. SEBI/HO/OW/IMD /PoD/P/2022/48112 /1 dated September 12, 2022
391 SEBI Circular No. MRD/DoP/MF/Cir`-08/2008 dated April 3, 2008, SEBI Circular No. SEBI/IMD/CIR No. 6/ 4213/04 dated
March 1, 2004, Refer SEBI letter No. OW/ 16541 /2012 dated July 24, 2012
392 SEBI Circular No. IIMARP/MF/CIR/07/826/98 dated April 15, 1998. Refer SEBI letter No. SEBI/HO/OW/IMD/IMD-
SEC1/P/2024/7541/1 dated February 09, 2024
393 SEBI Cir No. MFD/CIR NO -13/370/02 dated January 16, 2002
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15.19. Financial Inclusion394:
15.19.1. In context of Mutual Funds, financial inclusion implies that the concept
of Mutual Fund products is understood by all and are accessible to
anyone who wishes to make an investment in them. Also, investors
should be capable of figuring out which Mutual Fund scheme is
appropriate for their financial objectives. In this regard:
(a) AMCs shall mandatorily make available printed literature on
mutual funds in regional languages for investor awareness and
education.
(b) AMCs shall introduce Investor awareness campaign in regional
languages both in print and electronic media.
15.20. Voluntary Lock-in / Debit freeze facility to Mutual Fund folios395
15.20.1. In the first phase, the facility to lock the folio shall be provided to mutual
fund investors by the RTAs through MF Central platform, which was
introduced under Paragraph 17.5 of this Master Circular.
15.20.2. The facility shall be enabled only for KYC complied (Registered /
Validated) investors having valid Email ID and Mobile number (both
mandatory).
15.20.3. AMFI shall prescribe the detailed process for locking and unlocking of
folios to all AMCs / RTAs and shall also provide the processes to be
followed by different types of investors after due consultation with the
Board.
15.20.4. AMFI shall also prescribe the detailed list of financial transactions and
non-financial transactions that are allowed during such lock-in period to
AMCs / RTAs.
15.20.5. The detailed process of opting for such a facility and impact on different
financial transactions and non-financial transactions during the lock in
period shall be disclosed by all AMCs / RTAs on their websites and in
SAI.
15.20.6. The provisions under Paragraph 15.20 shall come into force with effect
from April 30, 2026.
15.21. Guidelines for Digital Accessibility
394 SEBI Cir No. CIR/IMD/DF/05/2014 dated March 24, 2014
395 SEBI Circular No. HO/24/12/12(5)2026-IMD-SEC-1/I/6373/2026 dated March 06, 2026
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15.21.1. AMCs/MFs shall comply with the guidelines for digital accessibility
issued by the Board, in line with Rights of Persons with Disabilities Act,
2016.396
396 SEBI Circular No. SEBI/HO/ITD-1/ITD_VIAP/P/CIR/2025/111 dated July 31, 2025, SEBI Circular No. SEBI/HO/ITD-
1/ITD_VIAP/P/CIR/2025/121 dated August 29, 2025, SEBI Circular No. SEBI/HO/ITD-1/ITD_VIAP/P/CIR/2025/131 dated
September 25, 2025, SEBI Circular No. HO/13/19/13(2)2025-ITD-1_VIAP/I/187/2025 dated December 08, 2025
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CHAPTER 16: CERTIFICATION AND REGISTRATION OF INTERMEDIARIES397 398
16.1. No AMC shall deal with any intermediary (i.e. distributors, agents, brokers,
sub brokers or called by any other name, whether individuals or belonging to
any other organization structure) in relation to selling and marketing of Mutual
Fund units unless they have cleared the certification examination399.
16.2. The certification examination for distributors, agents or any other persons
employed or engaged or to be employed or engaged in the sale and/or
distribution of mutual fund products, shall be conducted by the National
Institute of Securities Markets (NISM)400.
16.3. As per Regulation 4(3) of the SEBI (Certification of Associated Persons in the
Securities Markets) Regulations, 2007, the eligible persons may obtain the
certification either by passing the NISM certification examination or qualifying
for Continuing Professional Education (CPE) by obtaining such classroom
credits as may be specified by NISM from time to time. They shall also follow
the guidelines prescribed by the Board and AMFI from time to time.
16.4. No AMC shall engage/employ employee(s) interacting with investors (i.e.
those working in investors relations, call centres, employees engaged in sales
and marketing etc.) unless they have cleared the certification examination.
16.5. Further, such intermediaries and employees shall also adhere to the
Guidelines specified by the Board and AMFI401.
16.6. Due diligence of Mutual Fund Distributors402
16.6.1. The AMCs shall regulate the distributors by putting in place a due
diligence process as follows:
(a) The due diligence of distributors is solely the responsibility of
mutual funds/AMCs. This responsibility shall not be delegated to
any agency. However, mutual funds/AMCs may take assistance of
an agency of repute while carrying out due diligence process of
distributors403.
(b) The due diligence process shall be initially applicable for
distributors satisfying one or more of the following criteria:
397 SEBI Circular No. MFD/CIR No.10/310/01 dated September 25, 2001, SEBI Circular No. MFD/CIR/20/23230/2002 dated
November 28, 2002, SEBI Circular No. SEBI/MFD/CIR No.01/6693/03 dated April 3, 2003, SEBI Circular No. SEBI/IMD/CIR
No.2/254/04 dated February 4, 2004, SEBI Circular No. MFD/CIR/06/210/2002 dated June 26, 2002.
398 Exemption for Senior Citizens: Senior citizens with experience in distributing Mutual Funds units are exempt from the
mandatory certification examination if they have completed 50 years of age and have experience of at least 5 years as on
September 30, 2003. They are also required to follow the guidelines prescribed by the Board and AMFI. They had to attend a
mutual fund training programme and a certificate to that effect endorsed by a mutual fund should be submitted to AMFI.
399 Refer SEBI letter No.– OW / 14970 / 2012 dated July 5, 2012
400 SEBI Circular No. Cir/IMD/DF/5/2010 dated June 24, 2010
401 SEBI Circular No. MFD/CIR No.10/310/01 dated September 25, 2001, SEBI Circular No. MFD/CIR/20/23230/2002 dated
November 28, 2002, Refer SEBI email dated September 22, 2020 & October 14, 2020
402 SEBI Circular No. CIR/IMD/DF/13/2011 dated August 22, 2011, Refer SEBI email dated February 17, 2011.
403 SEBI Circular No. Cir/IMD/DF/7/2012 dated February 28, 2012, Refer SEBI letter no. IMD/RB/35057/2011 dated November
16, 2011
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(i) Multiple point presence (More than 20 locations)
(ii) AUM raised over Rs.100 Crore across industry in the non-
institutional category but including high net worth individuals
(HNIs)
(iii) Commission received of over Rs.1 Crore p.a. across industry
(iv) Commission received of over Rs.50 Lakh from a single
Mutual Fund
(c) At the time of empanelment and periodic reviews, Mutual
Funds/AMCs shall undertake a due diligence process to satisfy ‘fit
and proper’ criteria that incorporate, amongst others, the following
factors:
(i) Business model, experience and proficiency in the business.
(ii) Record of regulatory / statutory levies, fines and penalties,
legal suits, customer compensations made; causes for these
and resultant corrective actions taken.
(iii) Review of associates and subsidiaries on above factors.
(iv) Organizational controls to ensure that the following
processes are delinked from sales and relationship
management processes and personnel:
(I) Customer risk / investment objective evaluation.
(II) MF scheme evaluation and defining its appropriateness
to various customer risk categories.
(d) Customer relationship and transactions shall be categorized as:
(i) Advisory - where a distributor represents to offer advice while
distributing the product, it shall be subject to the principle of
‘appropriateness’ of products to that customer category.
Appropriateness is defined as selling only that product
categorization that is identified as best suited for investors
within a defined upper ceiling of risk appetite. No exception
shall be made.
(ii) Execution Only - in case of transactions that are not
categorized as ‘advisory’:
(I) Where the distributor has information to believe that the
transaction is not appropriate for the investor, a written
communication be made to the investor regarding the
unsuitability of the product. The communication shall
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have to be duly acknowledged and accepted by
investor.
(II) An investor confirmation to the effect that the
transaction is ‘execution only’ notwithstanding the
advice of in-appropriateness from that distributor be
obtained prior to the execution of the transaction.
(III) For all such ‘execution only’ transactions, the investor is
not required to pay the distributor anything404.
(iii) There shall be no third categorization of customer
relationship / transaction.
(iv) While selling Mutual Fund schemes of group entities405
or associates, the distributor shall make disclosure to the
customer regarding the conflict of interest arising from the
distribution of such schemes.
(e) Compliance and risk management functions of the distributor shall
include review of defined management processes for:
(i) The criteria to be used in review of products and the
periodicity of such review.
(ii) The factors to be included in determining the risk appetite of
the customer and the investment categorization and
periodicity of such review.
(iii) Review of transactions, exceptions identification, escalation
and resolution process by internal audit.
(iv) Recruitment, training, certification and performance review of
all personnel engaged in this business.
(v) Customer on boarding and relationship management
process, servicing standards, enquiry / grievance handling
mechanism.
(vi) Internal/ external audit processes, their comments /
observations as it relates to MF distribution business.
(vii) Findings of ongoing review from sample survey of investors.
(f) Mutual Funds/AMCs may implement additional measures as
deemed appropriate to help achieve greater investor protection.
404 SEBI Circular No.. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/115 dated August 08, 2025
405 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021
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16.7. Code of Conduct for Mutual Fund Distributors406:
16.7.1. AMCs shall monitor the activities of their distributors, agents, brokers to
ensure that they do not indulge in any malpractice or unethical practice
while selling or marketing Mutual Funds units.
16.7.2. Any noncompliance with the MF Regulations and Guidelines pertaining
to Mutual Funds including guidelines on advertisements and/ or sales
literature and/or applicable Code of Conduct shall be reported in the
periodic meetings of the Board of the AMC and the Trustee(s). Such
non-compliance shall also be reported to the Board by the AMC(s) in
their CTR(s) and by the Trustees in their HYTR.
16.7.3. AMFI has prescribed a Code of Conduct for Mutual Fund intermediaries
which is available on AMFI Website407. All intermediaries shall strictly
adhere to the Code of Conduct and not indulge in any practice
contravening it directly or indirectly408.
16.7.4. Non-compliance with the Code of Conduct shall be reported by the AMC
to the Board and AMFI. Further, any instance of mis-selling shall be
dealt with, in accordance with the guidelines issued by SEBI from time
to time409, and no Mutual Fund shall deal with intermediaries
contravening the prescribed Code of Conduct.
16.8. Empanelment of Intermediaries by Mutual Funds410
16.8.1. Empanelment of intermediaries by AMCs, payment of commissions,
brokerage and/or sub-brokerage etc. shall be in accordance with
parameters and guidelines specified by the Board and AMFI from time
to time. AMCs shall monitor the compliance of these guidelines and
Code of Conduct by their intermediaries in terms of business done
across all Mutual Funds. In case of non-compliance, AMCs shall
suspend further business and payment of commissions, etc. until full
compliance by the empanelled intermediary.
16.9. New cadre of distributors411
16.9.1. The following new cadre of distributors, shall be allowed to sell units of
simple and performing mutual fund schemes:
(a) postal agents,
406 Refer SEBI letter No. SEBI/HO/IMD/IMD-I DOF5/P/OW/2022/2463/1 dated March 21, 2022 & SEBI letter No.
SEBI/HO/IMD/IMD-I DOF5/P/OW/2022/14567/1 dated April 04, 2022
407 Also refer SEBI Circulars - MFD/CIR/ 06/210/2002 dated June 26, 2002; MFD/CIR/20/23230/02 dated November 28, 2002
and SEBI/IMD/08/174648/2009 dated August 27, 2009.
408 Refer SEBI letter No. SEBI/HO/OW/IMD/SEC-DIV-3/P/2022/44787/1 dated August 24, 2022
409 SEBI letter no. SEBI/HO/OW/IMD/SEC-Div3/P/2025/194/1 dated January 09, 2025
410 Refer SEBI letter No. IMD/SM/10 dated June 02, 2010
411 SEBI Circular No. CIR/IMD/DF/21/2012 dated September 13, 2012, Refer SEBI Letter No. IMD/OW/24/2013dated January
02, 2013
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(b) retired government and semi-government officials (class III and
above or equivalent) and retired teachers and retired bank officers,
with a service of at least 10 years, and
(c) other similar persons (such as Bank correspondents) as may be
notified by AMFI/AMC from time to time
16.9.2. Simple and performing mutual fund schemes shall comprise of
diversified equity schemes, fixed maturity plans (FMPs), index schemes,
Retirement benefit schemes having tax benefits and Liquid schemes/
Money Market Mutual Fund schemes412 and should have returns equal
to or better than their scheme benchmark returns during each of the last
three years.
16.9.3. These new cadre of distributors would require a simplified form of NISM
certification and AMFI Registration.
16.10. Alternative distribution channels413
16.10.1. Distribution through PSU Banks: Mutual Funds/AMCs may distribute
mutual fund products through PSU Banks.
16.10.2. Online distribution414: Mutual Funds/AMCs shall enhance the online
investment facility and tap the internet savvy users to invest in Mutual
Funds by providing an online investment facility on their websites.
Mutual Funds/AMCs shall also tap the burgeoning mobile-only internet
users for direct distribution of Mutual Fund products.
16.11. Unique Identity Number
16.11.1. AMFI shall create a unique identity number of the employee/ relationship
manager/ sales person of the distributor interacting with the investor for
the sale of mutual fund products, in addition to the AMFI Registration
Number (ARN) of the distributor.
16.11.2. The application form for mutual fund schemes shall have
provision for disclosing the unique identity number of such sales
personnel along with the ARN of distributor.
412 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2016/37 February 25, 2016.
413 SEBI Circular No. CIR/IMD/DF/05/2014 dated March 24, 2014
414 Refer SEBI emails dated June 04, 2010 and July 28, 2010
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CHAPTER 17: TRANSACTION IN MUTUAL FUNDS UNITS
17.1. Maintenance of documents415
17.1.1. As per the requirements specified by Board in respect of “Anti Money
Laundering (AML) Standards/Combating Financing of Terrorism (CFT)
/ Obligations of Securities Market Intermediaries under Prevention of
Money Laundering Act, 2002 and Rules framed thereunder”416,
maintenance of all documentation pertaining to the unitholders/
investors is the responsibility of the AMC.
17.1.2. Accordingly, AMCs shall confirm whether all the investor related
documents have been maintained/ available with the AMC. If not, and
to the extent of and relating to such investor accounts/folios where
investor related documentation is incomplete/inadequate/not available
or are stated to be maintained by the distributors, then the Trustees shall
ensure the following:
(a) No further payment of any commissions, fees and / or payments in
any other mode shall be made to such distributors till compliance/
completion of the steps enumerated herein.
(b) Take immediate steps to obtain all supporting documents in
respect of the past transactions and all investor/ unit holders
documents in terms of the AML/ CFT, including KYC documents/
PoA as applicable.
(c) On a one-time basis, send statement of holdings and all
transactions since inception of that folio in duplicate to the investor
and seek confirmation from the unit holders on the duplicate copy.
(d) Set up a separate customer services mechanism to handle/
address queries and grievance of the above mentioned
unitholders.
17.1.3. Pending completion of documentation, exercise great care and be
satisfied of investor bonafides before authorizing any transaction,
including redemption, on such accounts/ folios.
17.1.4. The Trustees shall confirm to Board that the steps have been taken to
address the above and also send the status to the Board as and when
process is completed to their satisfaction.
17.1.5. All mutual funds/ AMCs shall ensure that417:
415 SEBI Circular No - SEBI/IMD/CIR No.12 /186868 /2009 dated December 11, 2009, Refer SEBI letter No. IMD/AT/2868/10
dated April 27, 2010 and SEBI email dated August 20, 2010, Refer SEBI letter No. SEBI/HO/lMD2/DoF4/OW/P/19402/2019
dated July 30, 2019, Refer SEBI letter No. SEBI/HO/OW/IMD-II/DOF3/P/27993/2022 dated July 08, 2022 and SEBI letter No.
SEBI/HO/OW/IMD-II/DOF3/P/27989 dated July 08, 2022
416 SEBI Circular No ISD/AML/CIR-1/2008 dated December 19, 2008
417 SEBI Circular No Cir /IMD/DF/9 / 2010 dated August 12, 2010, Refer SEBI email dated January 10, 2020
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(a) All new folios/ accounts shall be opened only after ensuring that all
investor related documents including account opening documents,
PAN, KYC, PoA (if applicable), specimen signature are available
with AMCs/RTAs and not just with the distributor.
(b) For existing folios, AMCs shall be responsible for updation of the
investor related documents including account opening documents,
PAN, KYC, PoA (if applicable), specimen signature.
17.2. Facilitating transactions in Mutual Fund schemes through the Stock
Exchange infrastructure418
17.2.1. The Stock Exchange infrastructure, including terminals and online
platforms, can be used for facilitating transactions in Mutual Fund
schemes. This facility extends the convenience available to secondary
market investors to mutual fund investors.
17.2.2. Stock Brokers, Clearing Members and Depository Participants:
(a) The units of Mutual Fund schemes may be permitted to be
transacted through the following registered entities.
Entity type Permitted activity
Stock Brokers registered with Purchase & Redemption
recognized Stock Exchanges
Clearing Members of recognized Stock Purchase & Redemption
Exchanges
Depository Participants (DPs) registered Redemption only (for
with recognized Depositories units held in demat form)
The above entities shall be eligible to be considered as "Official Points
of Acceptance"419
(b) In this regard, Mutual Funds/AMC are advised that:
(i) Empanelment and monitoring of Code of Conduct:
(I) The stock brokers, clearing members and depository
participants420 intending to facilitate transaction in
Mutual Funds through stock exchange mechanism shall
be required to comply with the requirements of passing
418 SEBI Circular No - SEBI /IMD / CIR No.11/183204/ 2009 dated November 13,2009, Refer SEBI letter No.
SEBI/HO/IMD/DF5/OW/P/2020/11567/1 dated July 10, 2020, Refer SEBI letter no. SEBI/HO/IMD/IMD-I
DOF5/P/OW/2022/8536/1 dated February 25, 2022
419 SEBI Circular No. SEBI/IMD/CIR No.11/78450/06 dated October 11, 2006, Refer SEBI email dated February 07, 2011
420 SEBI Circular dated November 13, 2009 for stock brokers
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the AMFI/NISM certification examination421. All such
stock brokers, clearing members and depository
participants would then be considered as empanelled
distributors with mutual fund/AMC.
(II) These stock brokers, clearing members and depository
participants shall also comply with Code of Conduct422
for intermediaries of Mutual Funds, and applicable SEBI
guidelines423, applicable to intermediaries engaged in
selling and marketing of mutual fund units.
(III) Stock exchanges shall monitor the compliance of the
code of conduct specified regarding empanelment of
intermediaries by mutual funds424.
(ii) Time stamping: Time stamping as evidenced by confirmation
slip given by stock exchange mechanism to be considered
sufficient compliance with clause for cut–off timing for liquid
scheme and plans, cut-off timing for other schemes and plans
and time stamping provisions mandated by the Board425.
(iii) Investor grievance mechanism: Stock exchanges and
Depositories shall provide investor grievance handling
mechanism to the extent they relate to disputes between their
respective regulated entity and their client and shall also
monitor the compliance of code of conduct specified426
regarding empanelment and code of conduct for
intermediaries of Mutual Funds.
(iv) Know your client (KYC)
(I) For units held in dematerialised form, the KYC
performed by DP in terms of SEBI requirements427 shall
be considered compliance with applicable requirements
specified in this regard428 by Mutual Funds/AMCs.
(II) The Mutual Funds/AMC shall take necessary steps to
do KYC requirements of all investors as per the
prescribed guidelines429.
421 Please refer Chapter 16 on Certification and Registration of Mutual Funds intermediaries
422 For Code of Conduct, please refer to AMFI website
423 Please refer Chapter 16 on Certification and Registration of Mutual Funds intermediaries
424 Please refer Chapter 16 on Certification and Registration of Mutual Funds intermediaries
425 Please refer to Chapter 9 on Net Asset Value for details on cut off timing provisions
426 SEBI Circulars MFD/CIR/20/23230/02 dated November 28, 2002 and SEBI/IMD/08/174648/2009 dated August 27, 2009
427 SEBI Circular No - MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004 and SEBI/IMD/CIR No.11/183204/2009 dated
November 13, 2009
428 SEBI Circular No - ISD/AML/CIR-1/2008 dated December 19, 2008
429 SEBI Circular No. MIRSD/SE/Cir-21/2011, dated October 5, 2011, SEBI Circular No. MIRSD/Cir-23/2011 dated December
2, 2011 and SEBI Circular No. MIRSD/Cir- 26 /2011 dated December 23, 2011
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(v) Stock exchanges and mutual funds/AMCs, based on the
experience gained may improve the mechanism in the
interest of investors.
(vi) The respective stock exchanges and Depositories shall
provide detailed operating guidelines to facilitate the above
and ensure that timelines prescribed430 shall be adhered to
with regard to allotment of units and receipt of redemption
proceeds at the investor’s level.
17.2.3. Investment Advisors (RIAs)
(a) 431SEBI Registered Investment Advisors (RIAs) may use
infrastructure of the recognised stock exchanges to purchase
and redeem mutual fund units directly from Mutual Fund/AMCs on
behalf of their clients, including direct plans.
17.2.4. Mutual Fund Distributors(MFDs):
(a) 432A mutual fund Distributor registered with AMFI and who has
been permitted by the concerned recognised stock exchange,
shall be eligible to use recognised stock exchanges' infrastructure
to purchases and redeem mutual fund units directly from Mutual
Fund/AMCs.
(b) The recognised stock exchange shall grant permission on a
request made by a AMFI registered mutual fund distributor on the
basis of criteria including fee, code of conduct, etc. as laid down
by it.
(c) The MF distributors shall not handle payout and pay in of funds as
well as units on behalf of investor. The recognised stock exchange
shall put necessary system in place to ensure that pay in will be
directly received by recognised clearing corporation and payout
will be directly made to investor account. In the same manner, units
shall be credited and debited directly from the demat account of
investors, where held in demat mode.
(d) In order to broad base the reach of this platform, it is decided to
permit non-demat transactions also in the Mutual fund through
stock exchange platform433.
430 Please refer to Chapter 9 on Net Asset Value for details on cut off timing provisions
431 SEBI Circular No. SEBI/HO/MRD/DSA/CIR/P/2016/113 dated October 19, 2016
432 SEBI Circular No. CIR/MRD/DSA/32/2013 dated October 04, 2013
433 SEBI Circular No. CIR/MRD/DSA/33/2014 dated December 09, 2014,
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(e) The respective recognised stock exchanges, recognised clearing
corporations and depositories shall provide detailed operating
guidelines for MF distributor to facilitate the above.
17.2.5. Investors:
(a) 434Investors have been allowed to directly access infrastructure of
the recognised stock exchanges to purchase and redeem mutual
fund units directly from Mutual Fund/ Asset Management
Companies.
17.3. Discontinuation of usage of pool accounts for transactions in units of
Mutual Funds435
17.3.1. Pooling of funds and/or units in any form or manner by Stock Brokers,
Clearing Members, Mutual Fund Distributors (MFDs), Investment
Advisers (IAs), MF Utilities (MFU), Channel Partners, or any other
service providers/platforms, by whatsoever name called shall be
discontinued for mutual fund transactions. However, this requirement
shall not apply to the SEBI registered Portfolio Managers subject to
compliance with SEBI (Portfolio Managers) Regulations, 2020 and
circulars issued thereunder.
17.3.2. In case of transactions through service providers/platforms other than
stock exchanges, AMCs shall ensure that the transactions (financial/
non-financial) can be executed only if there is a service agreement
between the AMC and the service provider / platform.
17.3.3. Stock Brokers, Clearing Members, MFDs, IAs, MFU, Channel Partners,
or any other service providers/platforms, by whatsoever name called
shall ensure that funds are neither accepted nor handled in their
proprietary or pool accounts. AMCs and Stock Exchanges shall put
necessary mechanisms in place to ensure the settlement of funds and
units in the manner specified below:
Sl Type of Platforms / Service
Stock Exchange
No. transaction Providers other than stock
Platforms
exchanges
(a) Directly credited from the
Funds Pay- Directly received by the
investor’s account into the
in (i.e. Clearing Corporation
Mutual Fund Scheme Account
Subscription from the investor’s
without any intermediate
transaction) account.
pooling. For ease of
434 SEBI Circular No. SEBI/HO/MRD1/DSAP/CIR/P/2020/29 dated February 26, 2020
435 SEBI Circular No. SEBI/HO/IMD/IMD-I DOF5/P/CIR/2021/635 dated October 4, 2021, Refer SEBI letter No.
SEBI/HO/IMD/IMD-I DOF5/P/OW/2022/10847/1 dated March 15, 2022
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transactions, funds can be
routed through payment
aggregators authorized by RBI
or SEBI recognized clearing
corporations, as the case may
be.
(b) Directly credited to the
Funds Pay- Directly made to the
investor’s registered bank
out (i.e. investor’s account by
account from the Mutual Fund
Redemption the Clearing
Scheme Account without any
transaction) Corporation.
intermediate pooling.
(c) For both demat and non-
demat mode
transactions, the units For both demat and non-
shall be credited and demat mode transactions, the
Unit
debited directly to/ from units shall be credited and
Subscription
the investor’s demat debited directly to/ from the
and
account/ folio account investor’s account by/to the
Redemption*
without routing it through mutual fund without any
the pool account of the intermediate pooling.
stock brokers / clearing
members.
*Note: for redemption of units held in dematerialised mode, the practice of
issuance of Delivery Instruction Slip (‘DIS’) (physical or electronic) to the
Depository Participant to debit the units for delivery to clearing corporation may
continue.
17.3.4. Stock Brokers, Clearing Members, MFDs, IAs, MFU, Channel Partners,
or any other service providers/platforms, by whatsoever name called
shall strictly adhere to the following provisions w.r.t. payment
instruments:
Sl Type of Stock Brokers/ Clearing MFDs, IAs, MFU, Channel
No. payment Members Partners and other
entities (including online
platforms)
(a) Cheq ues Accept cheque payments Cheque payments from
from investors issued in investor shall be made in
favor of the respective SEBI favor of the respective MF
recognized Clearing Schemes only.
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Corporations or mutual fund
scheme(s) only;
(b) SIPs or Not accept mandates for Not accept mandates for
Lumpsum SIPs or Lumpsum SIPs or Lumpsum
transactions in their name transactions in their name.
(c) One-t ime Not accept payment through Not accept payment
Mandate one-time mandate or through one-time mandate
issuance of mandates/ or issuance of mandates/
instruments in their name for instruments in their name
mutual fund transactions. for mutual fund
transactions.
(d) New On or after July 01, 2022, On or after April 01, 2022,
mandate new mandates shall be new Mandates may be
accepted only in favor of accepted in the name of the
SEBI recognized Clearing OTM holders, subject to
Corporations and those compliance with conditions
mandates shall exclusively mentioned in below
be for subscriptions to units mentioned Item No. (e)
of Mutual Fund schemes and under Paragraph 17.3.4 and
not for any other purpose. those mandates shall
exclusively be for
subscriptions to units of
Mutual Fund schemes and
not for any other purpose.
(e) Existi ng (i) Existing mandates (i.e. (i) Existing mandates (i.e.
Mandates before July 01, 2022) before April 01, 2022)
being used for Mutual being used for Mutual
Fund transactions can Fund transactions can
continue to remain in the continue to remain in
name of the stock the name of OTM
brokers / clearing holders, subject to
members, subject to AMCs ensuring that
Stock Exchanges/ Payment Aggregators
Clearing Corporations (“PA”) puts in place
ensuring that Payment mechanisms wherein
Aggregators (“PA”) puts beneficiary of the
in place mechanisms mandate can only be an
wherein beneficiary of Approved Account
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the mandate can only be (which shall only be the
an Approved Account bank account of a
(which shall only be the mutual fund pool
bank account of the account or mutual fund
Clearing Corporation) scheme account) such
such that: that:
(I) PA shall directly credit (I) PA shall directly credit
the monies collected the monies collected
from the bank account from the bank account
of the investor only into of the investor only into
an Approved Account; an Approved Account;
and with the credit being
made as per the
mandate/instruction
(II) PA shall not act on given to the OTM
instructions of the stock holder by the client; and
brokers / clearing
(II) PA shall not act on
members to alter or
instructions of the OTM
modify the list of
holder to alter or modify
Approved Accounts
the list of Approved
and in no case the
Accounts and in no
monies shall be
case the monies shall
credited to the bank
be credited to the bank
account of the stock
account of the OTM
brokers / clearing
Holder.
members.
(ii) With respect to
(ii) With respect to
processing mutual fund
processing mutual fund
transactions under the
transactions under the
above mentioned
above mentioned
mandates, AMCs shall:
mandates, Stock
Exchanges/ Clearing (I) ensure that PA has put
Corporations shall: in place adequate
checks and balances,
(I) ensure that PA has put
inter alia, such that
in place adequate
Approved Account is
checks and balances,
that of a mutual fund
inter alia, to ensure
scheme or mutual fund
such Approved
registered with the
Account is that of a
Board;
Clearing Corporation;
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(II) enter into an (II) enter into an
agreement with the agreement with the
concerned PA to concerned PA to
ensure that only those ensure that only those
mutual fund mutual fund
transactions are transactions are
processed through processed through
them which are in them which are in
compliance with these compliance with these
guidelines. provisions.
(III) have adequate checks (III) have adequate checks
and balances to and balances to
monitor and govern the monitor and govern the
receipt of payments receipt of payments
through the PA, through the PA,
including by way of including by way of
third party audits (at third party audits (at
least on an annual least on an annual
basis), to verify the basis), to verify the
compliance with these compliance with these
provisions which shall provisions which shall
form part of the form part of the
agreement with the PA. agreement with the PA.
(iii) AMCs shall be liable to
the unit holders for
breach of these
conditions or misuse of
funds by PA or OTM
holder with respect to
mandates covering
Mutual Fund
transactions.
17.3.5. For better investor experience and faster transfer of funds, AMCs shall
provide different methods of payment through RBI recognized modes of
payment.
17.3.6. Stock Exchanges / Clearing Corporations shall provide investor
grievance redressal / arbitration mechanism to clients against stock
brokers/ clearing members (as is applicable for other segment of Stock
Exchange transactions), in case of breach of these conditions or misuse
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of funds by the PA appointed by the stock brokers/ clearing members or
by the stock brokers/clearing members with respect to mandates
accepted in respect of Mutual Fund transactions.
17.3.7. The onus of compliance with PMLA provisions and not permitting
transactions with third party bank account continues to lie with the
AMCs. AMCs may avail the services of SEBI recognized Clearing
Corporations to validate the investors’ source bank account information.
In such cases, Clearing Corporation shall make the necessary source
account details available to AMCs.
17.3.8. To facilitate investor servicing and parity in information dissemination,
Stock Exchanges, Depositories, AMCs, RTAs, and other entities
involved in mutual fund transactions, shall ensure the following:
(a) Detailed information at each stage of the relevant transaction,
including rejection, shall be made available at the same time to all
the stakeholders of the same category involved in the transactions,
as applicable, including investors, banks, stock brokers, clearing
members, clearing corporations, RTAs, AMCs, MFDs, IAs, etc. in
line with the operating guidelines issued by the Stock
Exchanges/AMFI. Only payment related information required to
ensure reconciliation and traceability shall be made available to
the Payment Aggregators.
(b) The information sharing as above, shall be system generated and
adequately secured.
(c) Cost towards system development / improvement in this regard, if
any, shall not be passed on to the investors.
(d) The information sharing with respect to direct plans of mutual fund
schemes shall be in line with the clarifications issued by the Board
to AMFI436
17.3.9. Stock Exchanges and AMFI shall jointly, in consultation with the Board,
issue Operating Guidelines to stock brokers/ clearing members and
AMCs respectively, to facilitate the mutual fund transactions on stock
exchange platforms. The Operating Guidelines shall include, inter-alia,
roles and responsibilities of various stakeholders, timelines with respect
to activities specified in Paragraph 17.3 of this Master Circular, sharing
of system generated information among various stakeholders at
relevant stage of the transaction in a secured environment, sharing of
relevant information with concerned entities to perform functional, tax
436 SEBI letter to AMFI dated September 6, 2021 (can be accessed from AMFI website at
https://www.amfiindia.com/Themes/Theme1/downloads/circulars/SEBIClarificationw.r.t.transactionsunderDirectPlan.PDF)
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and regulatory obligations, etc. All the concerned intermediaries shall
comply with the aforesaid Operating Guidelines.
17.3.10. It is reiterated that in terms of Regulation 4 (g) of SEBI (Investment
Advisers) Regulations, 2013, stock brokers are required to comply with
general obligations and responsibilities specified in Chapter III of SEBI
(Investment Advisers) Regulations, 2013, which, inter-alia, provide that
client level segregation of advisory and distribution activities needs to
be ensured at the entity and group level.
17.3.11. AMFI, in consultation with the Board, shall issue guidelines for AMCs
with regard to mitigating risks of co-mingling of funds at the level of
Payment Aggregators/Payment Gateways involved in mutual fund
transactions. It shall be mandatory for all AMCs to follow such
guidelines.
17.3.12. For the purpose of provisions of this Chapter, the term:
(a) “mandate” includes instrument, authorisation or order in any form,
including electronic means, to effect a payment by a person for the
purpose of mutual fund investment; and
(b) “Payment Aggregators” includes Payment Aggregators authorized
/ permitted by RBI and scheduled commercial banks acting in the
capacity of Payment Aggregators.
17.4. Other measures to prevent third-party payments and to safeguard the
interest of unitholders
17.4.1. The onus of compliance with PMLA provisions and not permitting usage
of third party bank account payments continues to lie with the AMCs.
17.4.2. AMCs shall make sure that payment for MF transactions are accepted
through only such modes where independent traceability of end investor
can be ensured and source account details are available as audit trail
without relying on any other intermediary’s records.
17.4.3. However, the investment in MF by way of cash/ through e-wallets
(Prepaid Payment Instruments) shall be in compliance with Paragraph
17.6 (for cash) and Paragraph 15.12 (for e-wallets) of this Master
Circular, respectively.
17.4.4. AMCs shall ensure that payment is credited directly to the registered
and verified bank account of the investor mapped with the concerned
folio, after due verification. The process carried out by AMCs to verify
bank account details i.e. investor name, bank account number, bank
name, etc. shall be available as audit trail.
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17.4.5. 437In case of subscription438 and redemption of units, Two-Factor
Authentication (for online transactions) and signature method (for offline
transactions) shall be used for authentication. One of the Factors for
such Two-Factor Authentication for non demat transactions shall be a
One-Time Password sent to the unit holder at his/her email/ phone
number registered with the AMC/RTA. In case of demat transaction,
process of Two-Factor authentication as laid down by the Depositories
shall be followed439. It is also clarified that in case of
mandates/systematic transactions the requirement of Two-Factor
Authentication shall be applicable only at the time of registration of
mandate/systematic transactions440.
17.4.6. AMFI’s best practice guidelines issued for AMCs with regard to Two-
Factor authentication for redemption transactions of Mutual Funds shall
be revised suitably to include subscription transactions of Mutual Funds.
It shall be mandatory for all AMCs to follow such guidelines.
17.4.7. AMC shall be liable to compensate the losses, if any, occurred to a unit
holder, where unauthorised transaction(s) occur(s) in unit holder’s folio
due to fraud/ negligence/ deficiency on the part of the AMC, employee
of AMC or persons/ entities whose services have been availed by the
AMC including the platform providers, MFDs, RTAs, MFU, and channel
partners, irrespective of whether or not the fraud is reported by the unit
holder. For this purpose, it is clarified that any unauthorised
transaction(s) performed by the Investment Advisors while providing
services to the unit holder(s) shall not be considered as a liability of the
AMC.
17.4.8. To strengthen control with respect to verification of key details of
investors like Bank account details, email id, mobile number and
address etc., AMFI, in consultation with the Board, has issued
guidelines. It shall be mandatory for all AMCs to follow such guidelines.
17.5. RTA inter-operable Platform for enhancing investors’ experience in
Mutual Fund transactions / service requests441
17.5.1. RTAs shall implement standardized practices, system interoperability
amongst themselves to jointly develop a common industry wide platform
that will deliver an integrated, harmonized, elevated experience to the
investors across the industry. AMCs, Depositories and other
stakeholders shall facilitate the RTAs for development and to create
awareness of the proposed platform
437 SEBI Circular No. SEBI/HO/IMD/IMD-I DOF5/P/CIR/2022/29 dated March 15, 2022
438 SEBI Circular No. SEBI/HO/IMD/IMD-I DOF1/P/CIR/2022/132 dated September 30, 2022
439 SEBI Circular No. SEBI/HO/IMD/IMD-I DOF5/P/CIR/2022/41 dated March 31, 2022
440 SEBI Circular No. SEBI/HO/IMD/IMD-I DOF1/P/CIR/2022/132 dated September 30, 2022
441 SEBI Circular No. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2021/604 dated July 26, 2021.
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17.5.2. The aforesaid platform shall, inter alia in phases, enable a user-friendly
interface for investors for execution of mutual fund transactions viz.
purchase, redemption, switch etc., initiation and tracking of service
requests viz. change of email id / contact number / bank account details
etc., initiation and tracking of queries and complaints, access investment
related reports viz. mutual fund holdings (both in demat and standard
SOA), transactions reports (including historic transactions), capital
gains/loss report, details of unclaimed dividend/redemption etc.
Through this platform, investors will be able to access these services for
all Mutual Funds in an integrated manner. In this regard, AMCs, RTAs
and Depositories shall take necessary measures to provide data via
APIs on a real time basis to the proposed platform. Additionally, RTAs
and Depositories shall also share their respective data feeds between
themselves for generation of investment related reports.
17.5.3. The platform may also over time, provide services to the distributors,
Registered IAs, AMCs, Stock Exchange platforms and digital platforms
for transacting in mutual funds to further augment ease of investing and
servicing of investors through the above stakeholders in consultation
with the Board.
17.5.4. AMCs, RTAs and Depositories shall review and agree to harmonize the
processes across the industry to provide a single-window, integrated,
simplified investment and service experience for the investors.
17.5.5. AMCs, RTAs, and Depositories shall adopt the data definitions and
standards as provided / recommended by the Board for data exchange
amongst various participants.
17.5.6. The Platform should be scalable with robust cyber security protocols
and supported through an API-based architecture. In this regard, the
platform shall adopt the Cyber Security and Cyber Resilience framework
specified by the Board from time to time to “MIIs” and “Qualified RTAs”.
Further, on request basis, APIs could be exposed to other industry
stakeholders such as distributors, registered IAs, Stock Exchange
platforms and digital platforms etc. with due approval of the concerned
Mutual Fund on mutually agreed terms442.
17.5.7. The RTAs are jointly and severally responsible for compliance with all
the applicable regulations including system audit and cyber security
audit. Further, RTAs shall ensure that the platform complies with the
guidelines for Business Continuity Plan (BCP) and Disaster Recovery
(DR) specified by the Board from time to time to “MIIs”.
442 Refer SEBI email dated April 28, 2015
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17.6. Cash Investments in mutual funds443
17.6.1. In order to help enhance the reach of mutual fund products amongst
small investors, who may not be tax payers and may not have
PAN/bank accounts, such as farmers, small
traders/businessmen/workers, cash transactions in mutual funds to the
extent of 50,000/-444 per investor, per mutual fund, per financial year
shall be allowed subject to (i) compliance with Prevention of Money
Laundering Act, 2002 and Rules framed there under; the SEBI
Circular(s) on Anti Money Laundering (AML) and other applicable
AML rules, regulations and guidelines and (ii) sufficient systems and
procedures in place.
17.6.2. Repayment in the form of redemptions, dividend, etc. with respect to
aforementioned investments shall be paid only through banking
channel.
17.7. Usage of pool accounts by Mutual Funds445
17.7.1. Mutual Funds may use pool accounts, only for such transactions which
are executed at mutual fund level owing to certain operational and
regulatory requirements, subject to the following conditions:
(a) 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.
(b) In such cases, at the end of day, the assets and liabilities of each
scheme shall be segregated and ring-fenced from other schemes
of the mutual fund; and bank accounts and securities accounts of
each scheme shall be segregated and ring-fenced. The pool
accounts for both securities and funds should have nil balance at
end of the day, except government securities including TREPS
and REPO in government securities held in SGL/CSGL accounts
in terms of Clause 7 of Sixth Schedule of MF Regulations. For the
securities held in SGL/CSGL accounts, the AMC must maintain a
clear record of segregation of such securities for each scheme in
its books of accounts.
Provided that if the funds lying in the pool bank account of the
mutual fund are not identified, due to the reasons beyond the
control of the AMC, the same shall be transferred to the respective
443 SEBI Circular No. CIR/IMD/DF/21/2012 dated September 13, 2012.
444 SEBI Circular No. CIR/IMD/DF/10/2014 dated May 22, 2014
445 SEBI/HO/IMD/DF2/CIR/P/2021/683 dated December 10, 2021
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scheme account not later than one business day from the day such
transactions are identified.
(c) At no point of time, the securities or funds of one schemes shall be
used for other scheme(s) and there shall be any conflict of interest
amongst investors of various schemes.
(d) The responsibility to ensure segregation and ring-fencing of the
assets and liabilities of each scheme along with segregation and
ring-fencing of bank accounts & securities accounts shall lie with
the Board of AMC and Trustees. Trustees in their HYTR to the
Board shall confirm that the assets and liabilities of each scheme
along with their bank accounts & securities accounts are
segregated and ring-fenced on daily basis, except the unidentified
transactions of funds as mentioned in Paragraph 17.7.1.(b) above,
during the half-year period.
(e) The whole mechanism shall be audited on half yearly basis by the
auditor appointed by the trustees.
17.7.2. Further, with regard to the margin or collateral requirement for execution
of certain transactions, which are carried out only at Mutual Fund level
by various schemes, in terms of Clause (7) of Part A of the Fourth
Schedule of MF Regulations, the AMC shall ensure that margins or
collaterals for such transactions are placed from the assets of the
respective schemes only, without co-mingling with the assets of other
schemes.
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CHAPTER 18: CORPORATE DEBT MARKET DEVELOPMENT FUND (CDMDF)
18.1. Framework for Corporate Debt Market Development Fund (CDMDF)446
18.1.1. Corporate Debt Market Development Fund (“CDMDF” or “the Fund”),
has been constituted to act as a Backstop Facility for purchase of
investment grade corporate debt securities to instill confidence amongst
the participants in the Corporate Debt Market during times of stress and
to generally enhance secondary market liquidity by creating a
permanent institutional framework for activation in times of market
stress.
18.1.2. CDMDF shall comply with the Guarantee Scheme for Corporate Debt
(GSCD) as notified by Ministry of Finance vide notification no. G.S.R.
559(E) dated July 26, 2023, which includes the Framework for CDMDF.
Further, the CDMDF falls under Category I AIF in terms of Regulation
3(4)(a) of SEBI (Alternative Investment Funds) Regulations, 2012.447
18.1.3. In addition to the abovementioned scheme as mentioned at Paragraph
18.1.2 above, the CDMDF shall comply with following:
(a) The fund shall deal only in following securities during normal times:
(i) Low duration Government Securities
(ii) Treasury bills
(iii) Tri-party Repo on G-sec
(iv) Guaranteed corporate bond repo with maturity not exceeding
7 days.
(b) The fees and expenses of the Fund shall be as follows:
(i) During Normal times: (0.15% + tax) of the Portfolio Value
charged on daily pro-rata basis.
(ii) During Market stress: (0.20% + tax) of the Portfolio Value
charged on daily pro-rata basis.
(iii) “Portfolio Value” means the aggregate amount of portfolio of
investments including cash balance without netting off of
leverage undertaken by the Fund.
(c) Clarification:
(i) The taxes as mentioned above shall include all kinds of
taxes.
446 Inserted by SEBI Circular No. SEBI/HO/IMD/PoD2/P/CIR/2023/128 dated July 27, 2023. Refer SEBI letter No.
SEBI/HO/IMD/IMD-POD-2/P/OW/2023/20790/1 dated May 23, 2023
447 SEBI Circular No. SEBI/HO/IMD/PoD2/P/CIR/2024/174 dated December 13, 2024
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(ii) Transaction costs on securities such as brokerage, clearing
charges etc. shall be charged within the limit of fees and
expenses.
(iii) Financing charges pertaining to borrowings made by CDMDF
(such as interest, guarantee fees, other fees like bank
charges, processing fees etc.) may be separate from fees
and expenses of the fund as provided above.
(d) Corporate debt securities to be bought by CDMDF during market
dislocation include listed money market instruments. The long term
rating of issuers shall be considered for the money market
instruments. However, if there is no long term rating available for
the same issuer, then based on credit rating mapping of CRAs
between short term and long term ratings, the most conservative
long term rating shall be taken for a given short term rating
(e) CDMDF shall follow the Fair Pricing document as placed at
Annexure 11A while purchase of corporate debt securities during
market dislocation.
(f) CDMDF shall follow the loss waterfall accounting, as prescribed at
Annexure 11B.
(g) CDMDF shall disclose NAV of the fund by 9:30 PM on all business
days on website of its Investment Manager and AMFI. For times
when CDMDF would have exposure to corporate debt, such NAV
shall be disclosed by 11 PM on all business days.
(h) Purchase allocation and trade settlement of corporate debt
securities bought by CDMDF during market dislocation:
(i) Keeping in view the prudential limits and various other
guidelines as prescribed in scheme as mentioned at
Paragraph 18.1.2 above, AMFI has specified the detailed
guidelines for purchase of securities by CDMDF in
consultation with the Board. Stock exchanges shall provide a
separate window on the existing RFQ platform to facilitate the
purchase as per AMFI issued guidelines.
(ii) Clearing Corporations shall provide required infrastructure to
facilitate the trade settlement of corporate debt trades by
CDMDF during market dislocation.
18.2. Investment by Mutual Fund Schemes and AMCs in units of CDMDF448
448 Inserted by SEBI Circular No. SEBI/HO/IMD/PoD2/P/CIR/2023/129 dated July 27, 2023
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18.2.1. CDMDF has been launched as a close ended scheme with an initial
tenure of 15 years (extendable) from the date of its initial closing (date
on which contribution from all AMCs and specified schemes is received
by CDMDF).
18.2.2. Accordingly, the following shall be ensured:
(a) The units of CDMDF shall be subscribed by AMCs of Mutual Funds
and “specified debt-oriented MF Schemes” (i.e., Open ended Debt
oriented Mutual Fund schemes excluding Overnight funds and Gilt
funds and including Conservative Hybrid funds). Contribution from
specified debt-oriented MF schemes and AMCs, including the
appreciations on the same, if any, shall be locked-in till winding up
of the Fund. However, in case of winding up of contributing MF
Schemes, inter-scheme transfers within the same Mutual Fund or
across Mutual Funds may be undertaken.
Clarification: Specified debt-oriented MF schemes exclude Index
funds and ETFs. Further, the Gilt funds as mentioned above shall
mean both Gilt Fund and Gilt Fund with 10-year constant maturity.
(b) Specified debt-oriented MF Schemes shall invest 25 bps of their
AUM in the units of CDMDF. The specified MF schemes shall
provide additional incremental contribution to CDMDF as their
AUM increases, every six months to ensure 25 bps of scheme
AUM is invested in units of CDMDF. However, if AUM decreases
there shall be no return or redemption from CDMDF. New schemes
from existing MFs under the specified categories or such schemes
of new MFs shall also contribute 25 bps of their respective AUM
and make incremental contribution.
(c) AMCs shall make a one-time contribution equivalent to 2 bps of
the AUM of specified debt-oriented MF Schemes managed by
them. Further, AMCs of new Mutual Funds shall also make a one-
time contribution equivalent to 2 bps of their specified debt-
oriented MF schemes, based on the AUM at the end of the
financial year following the one in which the specified scheme(s)
are launched.
(d) The initial contribution, as mandated above shall be based on AUM
of the specified MF schemes as on December 31, 2022.
(e) AMFI shall calculate and inform contribution to be made by each
MF Scheme and AMC, to CDMDF and the AMCs. The initial
contribution shall be made within 10 working days of request from
CDMDF. The Half-yearly contributions shall start from December
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2023 onwards, which shall be made within 10 working days from
end of each half year.
(f) In case of delay in contribution by Mutual Fund Schemes and
AMCs, the respective AMCs shall be liable to pay interest at 15%
per annum for the period of delay. Such interest shall be credited
to the fund of CDMDF.
(g) In times of market dislocation, CDMDF shall purchase listed
corporate debt securities from the specified debt-oriented MF
schemes. The trigger and period for which the Backstop Facility
will be open shall be as decided by the Board.
Clarification: Corporate debt securities include listed money
market instruments for the above purpose.
(h) During market dislocation, the securities purchased by CDMDF
would be from secondary market, having investment grade credit
rating and residual maturity not exceeding 5 years on the date of
purchase. CDMDF shall not buy any unlisted or below investment
grade or defaulted debt securities or securities in respect of which
there is a material possibility of default or adverse credit news or
views. As a principle, CDMDF shall buy at a fair price (adjusted for
liquidity risk, interest rate risk and credit risk) but not at distress
price. The utilization of such facility by specified debt-oriented MF
schemes shall be voluntary.
(i) The sellers of debt securities shall be paid 90% of the
consideration in cash and 10% in terms of units of CDMDF. Such
units paid as consideration (different class of units than units
allotted in lieu of contribution made) shall bear the risk of first loss,
if any to CDMDF, and can be redeemed during the tenure of
scheme, subject to certain conditions.
(j) Access to the fund: The respective Mutual Funds shall have
access to sell corporate debt securities during market dislocation,
held in the portfolio of contributing schemes, to the CDMDF.
Access to the Fund shall be in proportion to the contribution made
to the Fund at a Mutual Fund level (i.e., in the ratio of total units of
CDMDF held by all specified debt schemes of each Mutual Fund).
18.2.3. Further, the following has been decided in respect to investment of
Mutual Fund Schemes in CDMDF:
(a) Corporate debt securities sold by MF schemes to CDMDF during
market dislocation shall be treated as trade executed on RFQ
platform.
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(b) In case NAV of CDMDF units is not available by 9:30 PM, NAV
declaration timing for Mutual Fund Schemes holding units of
CDMDF shall be 10 am on next business day instead of 11 pm on
same day.
(c) CDMDF shall not be considered as an “associate” of any Mutual
Fund and investment made in units of CDMDF in accordance with
this Chapter shall not be considered as investment in associate or
group company of any Mutual Fund.
(d) AMCs shall ensure that the net worth as prescribed under
Regulation 16(3) shall be maintained over and above the
contribution made towards CDMDF.
(e) The calculations of PRC Matrix, Risk-o-meter, Stress testing and
Duration for various purposes shall be done after excluding
investments in units of CDMDF. Further, the investments in
CDMDF units shall not be considered as violation while
considering maturity restriction as applicable for various purposes.
(f) The relevant changes in the SID shall be incorporated by AMCs by
way of issuing an addendum prior to contributing to CDMDF. Such
changes shall not be considered as a Fundamental Attribute
Change of the scheme in terms of Regulation 22(9)(c).
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CHAPTER 19: EXECUTION ONLY PLATFORMS (EOP)449
19.1. Applicability and Scope
19.1.1. An EOP for facilitating transactions in direct plans of schemes of Mutual
Funds, shall mean:
“Any digital or online platform which facilitates transactions such as
subscription, redemption and switch transactions in direct plans of
schemes of Mutual Funds.”
19.1.2. The platforms provided by SEBI registered Investment Advisors and
Stock Brokers to their advisory or broking clients shall not be covered
under the EOP framework.
19.1.3. No entity shall operate as an EOP without obtaining registration from
the Board or AMFI, as the case may be and in the manner specified
herein.
19.1.4. The entity shall also facilitate non-financial transactions including
change of email id or contact number or bank account details on its
platform with respect to Mutual Funds.
19.1.5. The entity shall not provide services related to regular plans of schemes
of Mutual Funds on its platform.
19.2. Categories of EOP
19.2.1. Any entity desirous of operating as an EOP shall obtain registration
under one of the following two categories:
(a) Category 1 EOP
(i) The entity shall obtain registration from AMFI.
(ii) The entity shall be a body corporate.
(iii) The entity shall act as an agent of AMCs and integrate its
systems with AMCs and/or RTAs authorized by such AMCs,
to facilitate transactions in Mutual Funds.
(iv) The entity may act as an aggregator of the transactions in
direct plans of schemes of Mutual Funds and provide
services to investors/Investment Advisers.
(b) Category 2 EOP
(i) The entity shall obtain registration as a Stock Broker in terms
of the SEBI (Stock Brokers) Regulations, 2026 under the
EOP segment of the Stock Exchanges.
449 Inserted by SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2023/86 dated June 13, 2023
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(ii) The entity shall be a body corporate.
(iii) The entity shall operate as an agent of investor and operate
only through the platforms provided by the Stock Exchanges.
(iv) The entity shall not act as an aggregator of the transactions
in direct plans of schemes of Mutual Funds and shall provide
services to investors directly.
19.3. Eligibility Criteria
19.3.1. Any entity desirous of obtaining registration as a Category 2 EOP shall
ensure compliance with the following requirements, on a continuous
basis:
(a) The entity has appointed a compliance officer.
(b) The entity has appointed at least two qualified key managerial
personnel with experience of at least three years each in the
securities market;
(i) Explanation I. – For the purposes of this Chapter, “Key
managerial personnel” shall have the same meaning as
assigned to it in the Companies Act, 2013.
(ii) Explanation II. – For the purposes of this Chapter, a person
shall be said to be ‘qualified’ if he/she possesses a
professional qualification in finance, accountancy, law,
engineering, company secretaryship or management from a
university or an institution recognized by the Central
Government or any State Government or a foreign university
or post-graduation in the Securities Market from National
Institute of Securities Markets (NISM) of a duration not less
than one year.
(c) The entity shall fulfil the “fit and proper person” criteria as
prescribed under Schedule II of the SEBI (Intermediaries)
Regulations, 2008.
(d) The entity shall comply with the requirement of base net-worth
applicable for Trading Member, as specified under Chapter X of
SEBI (Stock Brokers) Regulations, 2026
19.3.2. As Category 1 EOP, the entity shall fulfil the criteria, as specified by
AMFI.
19.4. On-boarding and integration
19.4.1. On-boarding of investors
(a) As Category 2 EOP, the entity shall:
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(i) comply with KYC requirements at the time of on-boarding
investors on its platform and take necessary steps including
verifying the identity of its investors by requiring them to
submit necessary documents.
(ii) have access to the KYC data of the investors available with
the KYC Registration Agencies (KRAs) for on-boarding of
investors.
(iii) carry out necessary due diligence and ensure that investor
signs a “Rights and Obligation” document as specified by
Stock Exchanges before availing its services.
(b) For Category 1 EOPs, the requirements with respect to on-
boarding of investors shall be as specified by AMFI.
(c) The responsibility of ensuring compliance with KYC requirements,
with respect to transactions executed through both categories of
EOPs by investors in Mutual Funds, shall lie with the AMCs.
19.4.2. Rights and obligations
(a) As Category 1 EOP, the entity shall enter into agreement(s) with
the AMCs which shall clearly define their rights and obligations
relating to EOP services. Further the entity shall have an objective,
fair and transparent policy for providing execution services for
products of AMCs.
(b) As Category 2 EOP, the entity shall enter into necessary
arrangements with the Stock Exchanges which should clearly
define their rights and obligations relating to the EOP services.
19.5. Transaction and onboarding fees
19.5.1. As Category 1 EOP, the entity may levy a flat transaction fee (not ad-
valorem), if any, which shall be borne by AMCs, within the upper limit as
specified by AMFI. On-boarding fees, if levied, shall be borne by the
AMCs.
19.5.2. As Category 2 EOP, the entity may levy a flat transaction fee (not ad-
valorem), if any, which shall be borne by the investors, within the upper
limit as specified by the Stock Exchanges. Further, On-boarding fees, if
levied, shall be borne by the AMCs and/or investors.
19.5.3. AMCs shall not charge any fees/charges paid to the EOPs, to the
schemes of the Mutual Funds.
19.6. Operational Risk Management
19.6.1. The entities under both categories of EOPs shall:
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(a) ensure that they have a comprehensive risk management
framework covering all aspects of their operations and shall also
ensure that risks associated with their operations are identified and
managed.
(b) ensure access control for their clients and prevent unauthorized
access to their platform.
(c) ensure that all transactions on their platform, without exception,
are dealt with in a fair, non-discriminatory and orderly manner.
(d) formulate data governance, protection and dissemination policy
which is fair and non-discriminatory.
(e) facilitate only such transactions that are in compliance with the
prevailing legal or regulatory requirements and shall establish
appropriate controls to reduce the likelihood of erroneous
transactions.
(f) maintain all data relating to their activities in an easily retrievable
media. Also, maintain confidentiality and security of all data
relating to their activities and strictly control access to such data.
(g) ensure data integrity and privacy.
(h) establish necessary systems and frame suitable policies, in
writing, for onboarding of investors on their platform, execution of
transactions, rights and obligations/terms and conditions for the
investor and the EOP, risk management and control, liability
framework for EOP in case of breach of the policies, restrictions or
other requirements that may apply for accessing the platform.
19.6.2. The entities under both categories of EOPs may share investors’ data
with their other departments/divisions, their group entities and/or with
any third party, only with the specific consent of the investors.
19.6.3. As Category 1 EOP, the entity shall ensure compliance with cyber
security and cyber resilience requirements, as specified by AMFI. As
Category 2 EOP, the entity shall ensure compliance with the cyber
security and cyber resilience framework for Stock Brokers, as
prescribed by the Board from time to time.
19.7. Grievance Redressal
19.7.1. For Category 1 EOPs, the grievance redressal mechanism shall be as
prescribed by AMFI.
19.7.2. For Category 2 EOPs, the grievance redressal mechanism shall be as
prescribed for Stock Brokers from time to time i.e., through SCORES,
mediation and arbitration mechanism.
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19.8. Handling conflict of interest
19.8.1. The entities under both categories of EOPs shall ensure compliance
with the following:
(a) Maintain arm’s length relationship, if performing multiple activities
within the same entity, so as to avoid conflict of interest.
(b) Maintain investor level segregation between EOP services and
distribution services for Mutual Fund products, at the entity’s group
level. Thus, an investor at the EOP’s group level may either avail
EOP services for transacting in direct plans or distribution services
for regular plans of Mutual Funds.
(i) For this purpose, the family of the investor shall be reckoned
as a single investor. The definition of “group” shall have the
same meaning as defined under SEBI (Investment Advisers)
Regulations, 2013.
(ii) The PAN of each investor shall be the control record for
identification and investor level segregation at the entity’s
end. In case of an individual investor, “family of investor” shall
be reckoned as a single investor and PAN of all members in
“family of investor” shall jointly and severally be the control
record.
(iii) “family of investor” shall include individual investor,
dependent spouse, dependent children and dependent
parents. The dependent family members shall be those
members whose investments through EOP originates from
income of a single entity i.e. earning individual investor in the
family. The investor shall provide an annual declaration or
periodic updation as the case maybe in respect of such
dependent family members.
(c) Use SEBI/AMFI registration as an EOP, as the case may be, only
for the purpose of providing execution only services in direct plans
of Mutual Fund schemes and not use the said registration for
undertaking any unregulated activity.
(d) Undertake services regulated or permitted by other sectoral
regulators, only with specific disclosure regarding such services
not being covered under the ambit of entity’s registration as an
EOP and also disclose the details of registration/permissions by
other sectoral regulators in such cases.
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(e) Undertake to identify and disclose on their platform, possible
conflict(s) of interest, if any, including those arising from their
transactions or dealings with related parties.
19.9. Technology related requirements
19.9.1. The orders of investors placed through Category 1 EOPs shall be routed
directly to the AMCs and/or RTAs authorized by such AMCs.
19.9.2. The orders of investors placed through Category 2 EOPs shall be routed
through the platforms provided by the Stock Exchanges.
19.9.3. The order of the investors placed through both categories of EOPs shall
be executed on immediate basis.
19.9.4. The entities under both categories of EOPs shall:
(a) maintain robust technology infrastructure with a high degree of
reliability, availability, scalability and security in respect of their
systems, data and network, to appropriately support their
operations and manage the associated risks.
(b) have adequate and suitable systems in place to disseminate
information pertaining to orders placed on a real-time or a near
real-time basis.
(c) have the organizational capabilities, technology and systems and
safeguards for maintaining data privacy and preventing
unauthorized sharing of data.
(d) establish appropriate safeguards and procedures to deal with
exigencies including malfunctions or erroneous use of their
systems, or other unforeseen situations.
(e) make their platforms available for transactions at all times, on a
continuous basis.
19.10. Disclosure related requirements
19.10.1. Display of advertisements
(a) The entity under both categories of EOPs shall not display any
advertisement regarding any Mutual Fund scheme on their
platform. Further, they shall not display any
proxy/surrogate/common brand related advertisement on their
platform.
(b) With respect to advertisements of the EOPs on other
websites/applications/portals/media/channels, the entity
registered as Category 1 EOP shall ensure compliance with the
advertisement code prescribed by AMFI and the entity registered
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as Category 2 EOP shall ensure compliance with the
advertisement code prescribed by the Stock Exchanges.
19.10.2. Issuance of transaction receipt and alerts to the clients: The entities
under both categories of EOPs shall ensure the following:
(a) On placement of transactions by investors, issue or display without
delay, an electronic order receipt which shall include details such
as date and time of order, quantity of units and/or amount
proposed to be invested/redeemed.
(b) The status of transactions is provided to the investors on a
continuous basis.
19.10.3. Access to transaction data
(a) The entities under both categories of EOPs shall have access to
the investors’ transaction data feeds from AMCs or RTAs
authorized by AMCs for the transactions executed through their
platforms.
19.10.4. Disclosures regarding Mutual Fund schemes
(a) The entities under both categories of EOPs shall comply with the
following:
(i) Display in a user-friendly manner, the factual information
pertaining to Mutual Funds as available on public domain
including past performance of Mutual Fund schemes and
ensure compliance with the minimum disclosure
requirements as specified at Annexure 12A.
(ii) Provide an interactive tool for the investors to screen or filter
various schemes based on the criteria selected by the
investor including past performance, AUM, etc. and ensure
that there is no auto display of recommendation or ranking of
any of the schemes. If the criteria for selection includes
research reports or opinions, the same shall be only by SEBI
registered intermediaries along with suitable disclosures
regarding the source. Such research reports or opinions
should disclose the methodology used for such
recommendations. The aforesaid tool shall not itself provide
any research reports or opinions or perform any research
based or investment advisory activity.
(b) As Category 1 EOPs, the entities shall submit information or
reports as may be specified by AMFI.
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(c) As Category 2 EOPs, the entities shall submit information or
reports as may be specified by the Board or Stock Exchanges.
(d) The entities under both categories shall keep the AMCs and Stock
Exchanges or AMFI, as the case may be, informed of events
resulting in disruption of activities or market abuse without undue
delay.
(e) The Stock Exchanges or AMFI and AMCs (directly or through
AMFI) shall ensure periodic monitoring of the EOPs under their
supervision with respect to compliance with the requirements
mentioned in this Chapter and also bring to the notice of the Board,
any instances of non-compliance.
(f) As Category 1 EOP, the entity shall follow the code of conduct as
specified by AMFI.
19.11. Pooling of Funds
19.11.1. The entities under both categories of EOPs shall ensure compliance
with relevant provisions including Chapter 17 of this Master Circular
regarding discontinuation of usage of pool accounts for transactions in
units of Mutual Funds.
19.12. Maintenance of books of accounts, records, etc.
19.12.1. Regulation 15(1) of the SEBI (Stock Brokers) Regulations, 2026
provides that a Stock Broker in the EOP segment shall keep and
maintain the books of account, records and documents, as may be
specified by the Board. Accordingly, as Category 2 EOP, the entity shall
keep and maintain records as specified at Annexure 12B for a minimum
period of 5 years. As Category 1 EOP, the entity shall keep and maintain
the books of account, records and documents, in the form and manner
specified by AMFI.
19.13. Existing platforms
19.13.1. Existing platforms which are providing services similar to Category 1
EOPs such as platforms viz, MF Utilities India Pvt. Ltd., MF Central,
platforms provided by RTAs etc., shall obtain suitable registration under
one of the categories of EOPs.
19.13.2. As regards the platforms by MIIs such as the Stock Exchanges, which
are mandated by SEBI, although registration as an EOP shall not be
mandatory, such platforms shall ensure compliance with the applicable
requirements under the framework for EOP.
19.14. Implementation
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19.14.1. The Stock Exchanges shall enact appropriate framework for EOP
segment wherein the following requirements shall not be applicable for
Category 2 EOP:
(a) trading rules applicable for equity, equity derivative and other
segments
(b) Investor Protection Fund.
(c) rules applicable for clearing and settlement of trades relating to
equity, equity derivative and other segments.
(d) pooling of client’s funds by Trading Member.
(e) membership and other related requirements as a Self-Clearing
Member (SCM) or requirement of Trading Member – Clearing
Member agreement.
(f) risk management framework and settlement related polices
applicable for equity, equity derivative and other segments where
the Clearing Corporation provides novation and guarantee for
settlement of trades.
(g) issuance of contract notes and issuance of funds & securities
statement.
19.14.2. The Stock Exchanges desirous of providing an EOP segment shall:
(a) make necessary amendments to their relevant bye-laws, rules and
regulations for the implementation of the aforesaid directions; and
(b) monitor the operations carried out by EOPs who have obtained
membership under EOP segment
19.14.3. The AMFI shall:
(a) make necessary amendments for the implementation of the
aforesaid directions;
(b) issue necessary guidelines for Category 1 EOP; and.
(c) monitor the operations carried out by EOPs registered with AMFI.
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CHAPTER 20: MUTUAL FUND LITE (MF LITE) FRAMEWORK450
20.1. As various aspects of the existing regulatory framework may not be necessary
for passive funds, a relaxed regime with light-touch provisions “the MF Lite
Framework” is introduced only for passive Mutual Fund schemes.
20.2. Categories of passive schemes to be covered under MF Lite framework
The passive schemes based on the following underlying indices shall be
covered under phase-1 of implementation of the MF Lite Framework:
20.2.1. Passive funds based on only domestic equity passive indices (broad
indices tracked by passive funds or act as primary benchmark for
actively managed funds), with collective AUM of INR 5,000 Cr. and
above as on December 31 of each Financial Year. AMFI, in consultation
with the Board, shall prescribe the list of such domestic equity indices
on a periodic basis.
20.2.2. All G-Sec/ T-bills/ SDL based domestic target maturity debt passive
funds and (ii) domestic constant duration passive funds based on such
debt indices with collective AUM, which exceeds a threshold of INR
5,000Cr. and above as on December 31 of each Financial Year. AMFI,
in consultation with the Board, shall prescribe the list of such domestic
debt indices on a periodic basis.
20.2.3. All Gold ETFs, Silver ETFs and FoFs based on only Gold or Silver ETFs.
20.2.4. Overseas ETFs and FoFs having single underlying overseas passive
fund, wherein the underlying overseas benchmarks are as permitted
under Paragraph 20.3 below.
20.2.5. All FoFs investing only in single domestic/ overseas index, wherein the
reference benchmarks of underlying passive funds are as permitted
under Paragraph 20.2 (in case of domestic underlying indices) and
Paragraph 20.3 (in case of overseas underlying indices) of this Master
Circular.
20.2.6. All FoFs investing in more than one index shall not be covered under
the MF Lite framework under the phase 1 of implementation.
20.3. Uniform guidelines for launching equity passive schemes for overseas
indices
20.3.1. The indices, on which overseas passive schemes can be launched,
shall be standardized across industry and broad based in nature.
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20.3.2. Overseas ETFs/Index funds and FoFs investing in overseas ETF/index
funds shall comply with the diversification requirement of minimum 10
securities in an equity index portfolio.
20.3.3. Passive funds based on only those overseas equity passive indices,
whose quantitative threshold/ AUM exceeds a minimum threshold of $
20 billion as on December 31 of each Financial Year shall be covered
under phase 1 of implementation of MF Lite. AMFI, in consultation with
the Board, shall prescribe the list of such equity overseas indices on a
periodic basis.
20.4. Applicable to entities intending to get registered under Chapter X of MF
Regulations on “MF Lite Framework” to launch only MF Lite schemes
20.4.1. Eligibility criteria for Sponsor of MF Lite: In cases of both the Route 1
and Route 2, AMCs may appoint a separate Chief Risk Officer (CRO)
on a voluntary basis, otherwise the CCO may also act as the CRO of
the AMC, subject to his/her eligibility and experience in risk
management.
20.4.2. Pooled Investment Vehicle as sponsor of MF Lite: In terms of Route 2
under Regulation 57(1)(h), following shall be ensured:
(a) Among the pooled investment vehicles, only the private equity
funds (PEs) can sponsor an MF Lite.
(b) For any PE to qualify as a MF Lite sponsor, the following criteria
shall be applicable:
(i) The applicant PE (scheme/ fund) is itself a body corporate or,
a body corporate set up by a PE. The applicant body
corporate may be set up in India or abroad.
(ii) The applicant PE or its manager have a minimum of 5 years
of experience in the capacity of fund/investment manager
and an experience of investing in the financial sector, where
it should have managed committed and drawn-down capital
of not less than INR 2,500Cr. as on the date of its application
made to the Board.
(c) The following additional safeguards shall also be applicable for
PEs acting as MF Lite sponsor:
(i) There shall be no off-market transactions between the
schemes of the MF Lite and
(I) Sponsor PE; or
(II) Schemes/ Funds managed by the manager of the
Sponsor PE; or
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(III) Investee Companies of schemes/ funds of sponsor PE,
where it holds more than 10% stake; or has a board
representation or a right to nominate Board
representation.
(ii) As per Route 2 under Regulation 57(1)(f), an initial
shareholding of sponsor equivalent to capital contributed to
an AMC to the extent of not less than INR 75 Cr. shall be
locked-in for a period of 3 years. In such cases, the lock in
period of 3 years shall continue in case of transfer of
sponsorship to any other entity within the PE group provided
all the criteria required for a PE to act as sponsor are met by
the transferee PE as well.
(iii) The said lock in period of 3 years shall also be applicable to
the shareholding of PE in the corporate entity, which is
sponsoring the MF Lite.
(iv) The experience, track record and eligibility regarding the fit
and proper criteria of any applicant PE to become sponsor of
an MF Lite shall be ascertained through its conduct in the
respective home jurisdiction.
20.4.3. Reduction of stake and disassociation of sponsor
(a) Paragraph 2.4.1 of this Master Circular describes various
provisions w.r.t “Reduction of stake and disassociation of sponsor”
and shall also be applicable for AMCs registered under Chapter X
of MF Regulations on “MF Lite Framework” except Paragraph
2.4.1(a)(iii).
(b) For MF Lite Framework, in place of Paragraph 2.4.1(a)(iii) of this
Master Circular, the following shall be applicable:
“Net profit of the AMC after providing for depreciation, interest and
tax in 3 out of immediately preceding 5 years including the fifth
year; and average net annual profit after providing for depreciation,
interest and tax during the immediately preceding 5 years should
be at least INR 5 cr.”
20.4.4. Networth requirement for MF Lite AMC: MF Lite AMC shall abide by net
worth requirements under Chapter IV of MF Regulations, as and when
the total AUM of the MF Lite AMC exceeds INR 1 Lakh crore. In such
instances, the MF Lite AMC shall not launch any new scheme or take
further subscriptions in existing schemes, until it meets the networth
requirement as per Chapter IV of MF Regulations.
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20.4.5. Deployment of liquid net worth by MF Lite AMC: AMCs shall deploy the
minimum net worth required either in cash, money market instruments,
Government Securities, Treasury bills, Repo on Government securities,
or in listed AAA rated debt securities without bespoke
structures/structured obligations, credit enhancements or embedded
options or any other structure/feature which increase the liquidity risk of
the instrument on a continuous basis and such investments shall be
unencumbered. For this purpose, investment in Mutual Fund schemes
that in turn invest in aforementioned securities shall also be considered.
20.4.6. Acquisition of an MF Lite AMC:
(a) In case of Route 1 under Regulation 57(1)(g), the following shall
be ensured:
(i) In case of change in control of an existing MF Lite AMC due
to acquisition of shares, where the cost of acquisition is
funded out of borrowings by a sponsor, the sponsor shall
have sufficient other assets to encumber for borrowings other
than the shares of the proposed AMC.
(ii) The sponsor’s stake in the proposed AMC shall be free from
encumbrance, in any form, at all points of times.
(b) In case of Route 2 under Regulation 57(1)(g), in addition to the
conditions specified under Route 1 above, the minimum
incremental capital contribution required in the AMC shall be
funded only out of the net worth of the acquirer and not through
borrowings.
20.4.7. Norms for shareholding
(a) New players desirous of launching only passive MF schemes shall
register under the MF Lite framework.
(b) Existing MFs having both active and passive schemes may hive
off respective passive schemes covered under MF Lite
Framework, if they so desire, to a different group entity, thereby
resulting in management of active and passive schemes by
separate AMCs but under a common sponsor. In case of hiving off,
the following shall need to be complied with:
(i) The sponsor shall completely segregate and ring-fence its
resources including infrastructure, technology and staff etc.
for passive MF management from the active MF
management. However, the MF Lite AMC may outsource
certain other support functions namely, sales and marketing,
Human Resources (HR) and administration from the existing
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AMC with an outsourcing agreement in place, with all
transactions at arm’s length basis.
(ii) Various regulatory requirements including continuous net
worth requirement shall be made separately applicable to
both the existing AMC and the MF Lite AMC.
(iii) MF Lite AMC can carry the past track records of passive
schemes under it.
(iv) A sponsor shall be permitted to obtain up to 2 registrations
i.e. one each for MF- active and MF- Lite
(v) The hive-off of the passive business by an existing AMC shall
be made subject to the AMC (continuing with only active
schemes) providing an exit option to the existing investors of
the business being hived off.
(c) In terms of Regulation 59, if an existing mutual fund surrenders its
existing registration and migrates as an MF Lite, the said AMC
shall manage passive schemes based only on those underlying
indices that are permitted under abovementioned Paragraph 20.2
and Paragraph 20.3 of this Master Circular.
20.4.8. Trust Deed to be registered under the Registration Act: In terms of
Regulation 60, AMFI, in consultation with the Board, has prescribed a
standard trust deed, in line with roles and responsibilities of trustees as
per Chapter X of MF Regulations and provisions mentioned above.
20.4.9. Roles and responsibilities of trustees
(a) In terms of Regulation 62, the trustees shall seek information from
AMCs pertaining to the issues mentioned therein. In case of any
adverse observations, the trustee shall intimate the Board
regarding the same.
(b) Trustees of an MF Lite may not be required to have a Risk
Management Committee (RMC). Further, the requirement of an
RMC for an MF Lite AMC shall be optional and the audit committee
of AMC may undertake the additional role of RMC in case of MF
Lite.
(c) Constitution of the audit committee shall be optional for trustees of
an MF Lite AMC.
(d) The requirement under Paragraph 7.12 of this Master Circular
shall be optional for trustees of an MF Lite AMC.
(e) In case an existing AMC doesn’t hive off its passive schemes and
continues to manage the passive schemes under the current MF
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Regulations, the reduced roles and responsibilities of trustees as
mentioned in Chapter X of MF Regulations shall also be applicable
to the existing trustees of such AMC but only pertaining to the
passive funds allowed under the MF lite framework.
(f) Apart from the above, reporting presently required to be made to
trustees by AMC shall continue for MF Lite also, for information of
the trustees. In case AMC fails to timely submit the same to
trustee, the trustee shall intimate the same to the Board. Such
information inter alia shall include the following:
(i) Information sharing of tracking error (in case of equity) and
tracking difference (in case of debt) in case it exceeds
specified limits.
(ii) Submission of declaration that votes cast by AMC are in best
interest of investors.
(iii) Sharing of information regarding breakage of seal and/or
breakdown of the time stamping process.
(iv) Sharing of information of change in TER.
(v) Information on declaration of record date, determination of
quantum of dividend to be paid and ratification of actual
dividend paid.
(g) In case the trustees find any adverse observations with respect to
the aforesaid reporting, the trustee shall intimate the same to the
Board.
20.4.10. Roles and responsibilities of Board of MF Lite AMCs
(a) While trustees of MF Lite shall have the overarching role of
protection of the interest of investors, the Board of AMCs shall
have the primary accountability for acting in the interests of the
investors.
(b) The core responsibilities mentioned at Paragraph 7.8.1 of this
Master Circular shall be vested on the Board of AMC and the
trustees as under:
(i) The Board of AMC and trustees of an MF Lite AMC shall be
responsible for the core responsibilities mentioned at sub-
paragraphs (c), (d), (e), (f) and (g) of Paragraph 7.8.1 of this
Master Circular.
(ii) The Board of AMC of an MF Lite AMC shall be responsible
for the core responsibilities mentioned at sub- paragraphs (a)
and (b) of Paragraph 7.8.1 of this Master Circular.
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(c) Further, certain common responsibilities, currently entrusted upon
both trustees and AMCs, under the extant MF Regulations, such
as the following, shall be applicable only to the Board of AMCs of
an MF Lite:
(i) Periodic reporting to the Board as required by MF
Regulations and circulars issued there under.
(ii) Overall risk management of all scheme specific and AMC
specific risks.
(iii) Filing of offer documents with the Board and obtaining
regulatory approvals
(iv) Ensuring adequacy of infrastructure and sufficient key
personnel with adequate experience and qualification to
undertake management of assets at all times
(v) Appointment of key personnel including the chief investment
officer, registrars and share transfer agents, compliance
officer, auditor, custodian etc. and empanelment of brokers.
(vi) Responsibility for valuation of investments in accordance
with the specified requirements of the MF Regulations.
(vii) Constitution of UHPC as per Regulation 63(8)(d) and
Paragraph 7.10 of this Master Circular.
(d) The trustees are presently required to grant following approvals,
which shall be accorded by the Board of AMC under the MF Lite
framework:
(i) Approval for parking of funds pending deployment, in case it
exceeds specified limit.
(ii) Approval for a detailed written policy on creation of
segregated portfolio (in case of debt oriented mutual funds)
and necessary monitoring of recovery of investment
proceeds.
20.4.11. Investment Management Agreement: In terms of Regulation 62(1)(b)
AMFI, in consultation with the Board, has prescribed a standard
Investment Management Agreement in respect of MF Lite framework.
20.4.12. Transactions through brokers: In terms of Regulation 63(5)(a), the
market makers’ trades for creation and redemption of units shall be
excluded from computation of the broker limits for MF Lite schemes.
20.4.13. Registration of MF Lite Schemes
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(a) The fast tracking of SIDs shall be mandatory for passive schemes
floated by AMCs registered under MF Lite framework.
(b) MF Lite AMCs shall not be required to file a separate KIM for the
respective scheme.
20.4.14. Submission of Yearly AMC Report (YAR) report to SEBI
(a) The requirement of submission of HYTR to the Board shall not be
applicable.
(b) Instead, the Board of MF Lite AMC shall furnish to the Board an
YAR on a yearly basis furnishing the similar details as that of the
extant HYTR.
20.5. Provisions applicable to all passive schemes based on underlying
indices permitted under Paragraphs 20.2 and 20.3 above, irrespective of
the AMC being registered under the MF Lite Framework or not451
20.5.1. Simplified Scheme Information Document: The format of the simplified
SID for such schemes is enclosed as Format No. 5E. The simplified SID
shall be applicable for filing of all passive schemes based on underlying
indices those are permitted under Paragraphs 20.2 and 20.3 above.
20.5.2. Investor education and awareness
(a) The AMCs shall allocate funds towards investor education and
awareness initiatives for passive schemes as under:
(i) Fund of Funds (investing more than 80% of its NAV in the
underlying domestic passive fund) – Nil
(ii) Passive schemes and Overseas Fund of Funds (FoFs)-
based on underlying indices as per Paragraphs 20.2 and 20.3
above: 5% of total BER charged to direct plans, subject to
maximum of 0.5 bps of AUM.
(b) Out of the total amount transferred to AMFI for investor awareness
by AMCs, AMFI shall allocate a minimum of 5 percent for focused
investor education and awareness towards promoting passive
funds, distinct from AMFI’s general investor education initiatives.
20.5.3. Investment and trading in securities by the employees of the AMC(s)
and Trustee(s): In terms of Paragraph 7.6 of Master Circular, in case of
MF Lite AMC:
(a) Prior approval of employees’ transactions shall be replaced with
prior intimation. Thus, w.r.t MF Lite AMC, prior intimation of at least
3 working days before the date of transaction shall be mandated
451 SEBI Circular No. SEBI/HO/IMD/PoD2/P/CIR/2024/183 dated December 31, 2024
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and the requirement for reporting of employees’ transactions within
7 calendar days shall be retained.
(b) In case of existing AMCs, the above provision shall be applicable
to those employees who are only associated with passive
schemes based on underlying indices those are permitted under
Paragraphs 20.2 and 20.3 above.
20.5.4. Compliance and Disclosure requirements
(a) Updation of SID and KIM: The SIDs for MF Lite schemes shall be
updated within 2 months from the end of each financial year.
(b) Portfolio Disclosure (refer to Paragraph 6.1 of this Master
Circular):
(i) Debt passive schemes and Hybrid passive schemes shall
disclose their scheme portfolio on a monthly basis within 10
calendar days of every month.
(ii) Equity passive schemes shall disclose their scheme portfolio
within 10 calendar days from the close of each quarter.
(c) Unaudited Half Yearly Financials: The requirement for
publishing unaudited half yearly financials of the passive schemes
shall not be applicable. However, the Annual Reports of such
schemes shall continue to provide such details.
20.5.5. Investments by passive schemes
(a) The underlying securities in which passive schemes may invest
shall be equity, plain vanilla debt securities, physical commodities
and exchange traded commodity derivatives.
(b) Investment in equity derivatives of underlying securities forming
part of the index shall also be available as an investment option in
case the underlying security is not available for purchase.
However, investments in bespoke debt securities and debt
derivatives shall not be allowed.
(c) Passive schemes shall not be allowed to invest in the following:
(i) Unlisted debt instrument
(ii) Bespoke or complex debt products
(iii) Securities with special features
(iv) Inter scheme transactions
(v) Short selling
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(vi) Unrated debt and money market instruments (except G-
Secs, T-Bills and other money market instruments)
(d) Investment in equity derivatives of underlying securities shall be
allowed in instances of portfolio rebalancing or unavailability of the
securities.
20.5.6. Tracking difference (TD) for equity oriented passive schemes: In case
of equity oriented passive schemes, TD shall be targeted to be 50 bps
(over and above actual TER charged). In case the same is not
maintained, it shall be brought to the notice of trustees along with
corrective actions taken by the AMC, if any.
20.6. All other relevant provisions of this Master Circular, unless the context
otherwise requires, or is contradictory to the provisions of this Chapter, shall
apply to a MF Lite, MF Lite schemes, and trustees and MF Lite AMCs in
relation to such mutual funds and schemes.
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CHAPTER 21: SPECIALIZED INVESTMENT FUND (SIF)452
21.1. Eligibility Criteria for SIF
21.1.1. A registered mutual fund may launch SIF, provided they meet the
eligibility criteria under one of the following routes:
(a) Route 1 - Sound track record:
(i) Mutual Fund has been in operation for a minimum period of
3 years and has an average AUM of not less than INR 10,000
crores, in immediately preceding 3 years.
(ii) No action has been initiated or taken against the
sponsor/asset management company (‘AMC’) under section
11, 11B, and/or Section 24 of the SEBI Act, 1992 during the
last 3 years.
(b) Route 2 – Alternate route:
(i) The AMC has appointed:
(I) A Chief Investment Officer (‘CIO’) for the SIF with an
experience of fund management of at least 10 years
and has managed an average AUM of not less than INR
5,000 crores, and
(II) An additional Fund Manager for the SIF with experience
of fund management of at least 3 years and has
managed an average AUM of not less than INR 500
crores.
(ii) No action has been initiated or taken against the
sponsor/AMC under section 11, 11B, and/or Section 24 of the
SEBI Act, 1992 during the last 3 years.
(c) The AMC may share resources for operations across mutual fund
and SIF.
(d) A registered Mutual Fund shall file an application, as per the
application form provided under Format No. 2A, for prior approval
with the Board for launch of an SIF.
21.2. Branding and advertisement requirements
21.2.1. AMCs shall ensure that the SIF has a distinct brand name and distinct
logo, separate from that of its regular Mutual Fund.
452 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/26 dated February 27, 2025, SEBI Circular No.
SEBI/HO/IMD/IMD-RAC/P/CIR/2025/54 dated April 11, 2025
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Provided that, the AMC may use the sponsor’s or mutual fund’s brand
name in the offer documents, advertisements and promotional materials
of the SIF for a period of five years from the date of approval for the
launch of the SIF.
21.2.2. When referring to the sponsor’s or mutual fund’s brand name for SIF,
the AMC shall use phrases such as “brought to you by,” “offered by,” or
similar terms.
Illustration: An AMC managing “ABC Mutual Fund” may create a distinct
SIF brand, such as “XYZ,” with a unique logo. The SIF may initially be
marketed as ‘XYZ SIF – brought to you by ABC Mutual Fund’ or ‘XYZ
SIF – offered by ABC Mutual Fund.’
21.2.3. The font size of the sponsor’s or Mutual Fund’s brand name in all offer
documents, marketing, and promotional materials shall be equal to or
smaller than the font size of the SIF’s brand name
21.2.4. The AMC shall adhere to the advertisement guidelines applicable to
Mutual Fund schemes for all investment strategies offered under the
SIF.
21.2.5. The AMC shall maintain a separate website or dedicated webpage
exclusively for the SIF, ensuring clear differentiation between the SIF’s
offerings and the regular Mutual Fund offerings.
21.3. Investment strategies
21.3.1. The following investment strategies shall be permitted to be launched
under SIF:
(a) Equity Oriented Investment Strategies
Sr Category of Characteristics of Type of Minimum
No. Investment Investment strategy investment redemption
Strategy strategy (uniform frequency
description of
investment
strategy)
(i) Equity Long- Minimum investment in An open Daily or any
Short Fund equity and equity related ended/interval lesser
instruments – 80% and equity investment redemption
strategy investing frequency
Maximum short
in listed equity and as may be
exposure through
equity related decided by
unhedged derivative
instruments the AMC
positions in equity and
including limited
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equity related short exposure in
instruments: 25% equity through
derivative
instruments.
(ii) Equity Ex- Minimum investment in An open Daily or any
Top 100 equity and equity related ended/interval lesser
Long-Short instruments of stocks investment redemption
Fund excluding top 100 stocks strategy investing frequency
by market capitalization in equity and equity as may be
– 65% related instruments decided by
including limited the AMC
short exposure in
Maximum short equity through
exposure through derivative
unhedged derivative instruments, of
positions in equity and stocks other than
equity related large cap stocks.
instruments of other than
large cap stocks: 25%
(iii) Sector Minimum investment in An open Daily or any
Rotation equity and equity related ended/interval lesser
Long-Short instruments of maximum investment redemption
Fund 4 sectors – 80% strategy investing frequency
in equity and equity as may be
related instruments decided by
Maximum short including limited AMC
exposure through short exposure in
unhedged derivative equity through
positions in equity and derivative
equity related instruments, of
instruments: 25%* maximum four
sectors.
*Short exposure shall
apply at the sector level,
covering all stocks within
that sector held in the
portfolio. For instance, if
the fund takes a short
position in the Auto
sector, all Auto sector
stocks in the portfolio
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must be held as short
positions.
(b) Debt Oriented Investment Strategies
Sr Category Characteristics of Type of Minimum
No. of Investment strategy investment redemption
Investment strategy (uniform frequency
Strategy description of
investment
strategy)
(i) Debt Long- Investment in debt Interval investment Once in a
Short Fund instruments across strategy investing week or any
duration, including in debt instruments lesser
unhedged short exposure including limited redemption
through exchange traded short exposure in frequency
debt derivative debt instruments. as may be
instruments. decided by
AMC
Maximum short exposure
through unhedged
derivative positions in
debt instruments: 25%*
(ii) Sectoral Investment in debt Interval investment Once in a
Debt Long- instruments of at least two strategy investing week or any
Short Fund sectors, with maximum in debt instruments lesser
investment of 75% in a including limited redemption
single sector. short position in frequency
debt instruments, as may be
Maximum short exposure
of minimum two decided by
through unhedged
sectors. AMC
derivative positions in
debt instruments: 25%*
*Short exposure shall be
across the sector,
applicable for all the
instruments of that
particular sector held in
the portfolio. Example: If
the fund is short on Auto
sector, then all debt
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instruments of the Auto
sector, held in portfolio,
shall be held as short
positions.
(c) Hybrid Investment Strategies
Sr Category Characteristics of Type of Minimum
No. of Investment strategy investment redemption
Investmen strategy (uniform frequency
t Strategy description of
investment
strategy)
(i) Active Dynamic investment Interval investment Two Times
Asset across following asset strategy in a week or
Allocator classes: dynamically any lesser
Long-Short investing across redemption
Equity, debt, equity and
Fund equity, debt, equity frequency
debt derivatives, InVITs
and debt as may be
and commodity
derivatives, InVITs decided by
derivatives.
and commodity AMC
Maximum short exposure derivatives,
through unhedged including limited
derivative positions in short exposure on
equity and debt permitted
instruments: 25% instruments
through
derivatives.
(ii) Hybrid Minimum investment in Interval investment Two Times
Long-Short equity and equity related strategy investing in a week or
Fund instruments - 25% in equity and debt any lesser
securities, redemption
Minimum investment in
including limited frequency
debt instruments – 25%
short exposure in as may be
Maximum short exposure equity and debt decided by
through unhedged through AMC
derivative positions in derivatives.
equity and debt
instruments: 25%
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21.3.2. Only one investment strategy shall be permitted to be launched under
each of the aforementioned categories.
21.4. Minimum investment threshold
21.4.1. The AMC shall ensure that an aggregate investment by an investor
across all investment strategies offered by the SIF, at the PAN level, is
not less than INR 10 lakh (hereinafter referred to as the ‘Minimum
Investment Threshold’).
Provided that, the above provisions shall not be applicable for
mandatory investments made by AMCs for designated employees
under Paragraph 7.14 of this Master Circular453.
21.4.2. The Minimum Investment Threshold of INR 10 lakh shall apply
exclusively to investments under SIF and shall not include investments
made by the investor in regular MF schemes of the same AMC.
21.4.3. The AMC may offer systematic investment options such as SIP’, SWP
and STP for investment strategies launched under the SIF, while
ensuring compliance with the Minimum Investment Threshold.
21.4.4. The AMC shall monitor compliance with the Minimum Investment
Threshold on a daily basis and ensure that there are no active breaches.
The AMC shall ensure that the investor's total investment value does
not fall below the Minimum Investment Threshold due to redemption
transactions initiated by the investor.
(a) 454In case of any active breach of the Minimum Investment
Threshold by an investor, including through transactions on stock
exchanges or off-market transfers:
(i) all units of such investor held across investment strategies of
the concerned SIF shall be frozen for debit, and
(ii) a notice of 30 calendar days shall be given to such investor
to rebalance the investments in order to comply with the
Minimum Investment Threshold.
(b) Pursuant to the notice under Paragraph 21.4.4(a)(ii) above to the
investor:
(i) in case investor rebalances his/her investments in SIF within
the notice period of 30 calendar days, the units of SIF of such
investor shall be unfreezed, and no further action shall be
taken with regard to compliance with Minimum Investment
Threshold.
453 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/53 dated April 09, 2025
454 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/107 dated July 29, 2025
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(ii) In case the investor fails to rebalance the investments within
the aforesaid 30 calendar day period, the frozen units shall
be automatically redeemed by the AMC, at the applicable Net
Asset Value of the next immediate business day after the 30th
calendar day of the notice period
(c) For the purpose of SIF, the ‘Active Breach’ shall mean fall in the
aggregate value of an investor’s total investment across all
investment strategies of SIF, below the Minimum Investment
Threshold of INR 10 lakhs, on account of any transactions (i.e.
redemption, transfer, sale etc.) initiated by the investor.
(d) The AMCs, RTAs and Depositories shall take necessary steps and
put in place necessary systems for the implementation of this
circular.
21.4.5. Passive breaches (occurrence of instances not arising out of omission
and commission by AMC), such as those caused by a decline in NAV,
shall not be treated as a violation of the Minimum Investment Threshold.
However, if the total investment value falls below the threshold due to a
passive breach, the investor shall only be permitted to redeem the entire
remaining investment amount from the SIF
21.4.6. AMFI shall coordinate with recognized stock exchanges, depositories,
and Mutual Fund RTAs to deploy systems and processes for the active
monitoring of the Minimum Investment Threshold.
21.5. Restriction on investments
In terms of Regulation 52, the AMC shall ensure compliance with the following
prudential norms:
Sr. Particulars Description Maximum Proviso
no Investment/
exposure limit
1. Investment by Investment in equity 10% of NAV The limit shall also be applicable
SIF shares or equity for investment in units of Venture
Investment related instruments of capital funds.
Strategy any entity by a SIF
scheme in Investment Strategy
equity
instruments
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2. Single issuer (a) Investment by a (i) Overall limit- (A) Such limit shall also be
limit for investment 20% of NAV applicable to mortgage
investment in strategy of SIF in backed securitized debt which
debt debt instruments are rated not below
instruments comprising money (ii) Sub limits- investment grade by a credit
market based on rating agency registered with
instruments and credit rating of the Board
non-money market the
(B) Such limit shall not be
instruments issued instruments
applicable for investments in
by a single issuer for actively
Government Securities,
which are rated not managed
treasury bills and triparty repo
below investment Investment
on Government securities or
grade by a credit Strategies of
treasury bills.
rating agency SIF –
authorized to carry (C) Such limit shall not be
out such activities applicable for investments in
(I) 20% of its
under the Act. case of debt exchange traded
NAV in
funds or such other funds as
debt and
may be specified by the Board
money
from time to time.
market
(D) The long term rating of
securities
issuers shall be considered
rated AAA;
for the money market
or
instruments. However, if there
(II) 16% of its
is no long term rating
NAV in
available for the same issuer,
debt and
then based on credit rating
money
mapping of Credit Rating
market
Agencies between short term
securities
and long term ratings, the
rated AA;
most conservative long term
or
rating shall be taken for a
given short term rating.
(III) 12% of its
Exposure to government
NAV in
money market instruments
debt and
such as TREPS on G-Sec/ T-
money
bills shall be treated as
market
exposure to government
securities
securities.
rated A and
below
issued by a
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single
issuer
(b) Additional Additional 5% of
Investment in any NAV (i.e. upto
issuer as well as its maximum 25% of
instruments NAV)
(based on ratings)
with prior approval
of the Board of
Trustees and
Board of Directors
of the AMC
3. Investment in Investment by mutual 15% of paid-up Investment in the asset
paid-up fund having SIF capital of the management company or the
capital of a Investment company trustee company of a mutual fund
company at Strategies, under all shall be governed by Regulation,
mutual fund its schemes and 6(1)(a).
level having Investment Strategies Or
Provided further that the 15% limit
SIF in any company’s paid
15% of units of shall be inclusive of 10% limit for
Investment up capital carrying
REITs issued by a mutual fund schemes as specified
Strategies voting rights.
single issuer at Item No. 5 under Paragraph
13.1.
Explanation: If a mutual fund
under all its schemes owns 10% of
any company’s paid up capital
carrying voting rights, then the SIF
under all its investment strategies
shall not own more than 5% of that
company’s paid up capital
carrying voting rights.
4. Investment by (a) Under all 20% of units Provided that the 20% single
SIF Investment issued by a single issuer limit shall be inclusive of
Investment Strategies of SIF issuer 10% limit for mutual fund schemes
Strategies in as specified at Item No. (a) under
units of InvITs Paragraph 13.13.5.
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(b) Investment by SIF 20% of NAV of Such limits shall not be applicable
Investment Investment for investments in case of index
Strategy in the Strategy fund or sector or thematic scheme
units of InvITs pertaining to InvIT.
(c) Investment by SIF 10% of NAV of
Investment Investment
Strategy in the Strategy
units of InvITs
issued by a single
issuer
5. Investments (a) Investment in a 25% of net assets Such limit shall be excluding
in debt and particular sector of Investment investments in Bank CDs, triparty
money Strategy repo on Government securities or
market treasury bills, G-secs, Tbills, short
instruments in term deposits of Scheduled
a specific commercial banks and AAA rated
sector securities issued by Public
Financial Institutions and Public
Sector Banks.
(b) Additional 10% of net assets (A) Additional exposure in
exposure to of Investment securities issued by HFCs
financial service Strategy (over shall be rated AA and above
sector through and above the and these HFCs are
investment in limit of 25% registered with National
Housing Finance mentioned above) Housing Bank(NHB)
Companies
(B) Overall maximum investment
in housing finance companies
(c) Additional 5% of net assets
shall not exceed the sector
exposure to of Investment
exposure limit of 25% of the
financial service Strategy (over
net assets of the Investment
sector through and above the
Strategy.
investment in limit of 25%
securitized debt mentioned above) (C) Appropriate disclosures in this
instruments based regard shall be made in ISID
on retail housing and KIM of respective
loan portfolio schemes.
and/or affordable
housing loan
portfolio.
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6. All other investment restrictions applicable for schemes of mutual funds as specified under
Paragraph 13.1 and Sixth Schedule of MF Regulations shall apply to investment strategies
under the SIF, unless otherwise specified.
21.6. Investment in derivatives
21.6.1. Investment by SIF in eligible derivative products shall be as follows:
(a) The investment strategies under the SIF may take exposure of up
to 25% of the net assets in permissible exchange traded derivative
instruments, specifically for purposes other than hedging and
portfolio rebalancing.
Explanation: This provision allows an investment strategy under
the SIF to take unhedged short exposure through derivative
instruments of up to 25% of net assets, in addition to derivative
exposure undertaken for hedging and portfolio rebalancing
purposes.
(b) The exposure to derivative contracts for the investment strategies
under SIF shall be computed as follows:
(i) Futures (long and short) = Futures Price * Lot Size * Number
of Contracts
(ii) Options bought = Option premium paid * Lot size * Number
of contracts
(iii) Options sold = Market price of the underlying * Lot size *
Number of contracts
(iv) In case of any other derivative exposure, the exposure shall
be calculated as the notional market value of the contract.
(c) The total exposure at any point of time shall be the sum of
exposure through instruments in both the cash market and
derivatives market.
(d) Offsetting of exposure at the portfolio level shall be allowed for:
(i) Cash and derivative positions on the same underlying
security
(ii) Between derivative positions on the same underlying security
The illustration on exposure calculation and offsetting of derivative
positions is provided in Annexure 13A.
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(e) The cumulative gross exposure through equity, debt, derivative
positions (including commodity and fixed income derivatives), repo
transactions and credit default swaps in corporate debt securities,
InvITs, other permitted securities/assets and such other
securities/assets as may be permitted by the Board from time to
time shall not exceed 100% of the net assets of the investment
strategy.
21.7. Subscription and redemption of units of investment strategies
21.7.1. Subscription and redemption frequencies:
(a) The subscription and redemption frequency of investment strategy
under SIF shall be based on the nature of investments, including
daily, weekly, fortnightly, monthly, quarterly, annually, fixed
maturity, or other suitable intervals. The SIF may decide on the
appropriate frequency of subscription/ redemption to allow the fund
managers to adequately manage liquidity of the fund without
imposing undue constraints on the investors.
(b) The subscription and redemption frequency of an investment
strategy may also be distinct from each other.
Illustration: An investment strategy may permit daily subscriptions,
while offering weekly redemptions.
21.7.2. Notice periods: Based on structure of the investment strategy and the
liquidity risk associated with it, AMC may implement appropriate notice
periods for redemption from the investment strategy of SIF, in the
following manner:
(i) In case of notice period, the redeeming investor shall receive
the value of units sold based on the fund’s NAV at the end of
the notice period.
(ii) Maximum duration of notice period shall not exceed 15
working days.
21.8. Listing of units of investment strategies
21.8.1. To provide an exit option for the redeeming investors, the units of all
close ended and interval investment strategies of SIF shall be
mandatorily listed on recognized stock exchange(s).
21.8.2. For the purpose of SIF, investment strategies with subscription and/or
redemption frequency other than daily shall be classified as ‘Interval
investment strategies’.
21.9. Benchmarking of Investment Strategies
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21.9.1. The investment strategies of SIF shall follow a single-tier benchmark
structure.
Provided that, AMC at its discretion may also provide second tier
benchmark for investment strategies as applicable for schemes of
Mutual Funds under Paragraph 7.22.5 of this Master Circular.
21.9.2. The AMC shall appropriately select any broad market indices available,
as a benchmark index depending on the investment objective and
portfolio of the investment strategy.
21.9.3. The guiding principles for selection of benchmarks are as follows:
(a) Equity oriented investment strategies shall be compared against a
suitable broad market index such as BSE Sensex or NSE Nifty or
BSE 100 or CIRISL 500 etc
(b) Debt oriented investment strategies shall be compared with a
suitable broad market index that is a representative of the fund’s
portfolio.
(c) Hybrid investment strategies shall be compared with suitable
broad market benchmark wherever available.
21.10. Distribution of Specialized Investment Funds
21.10.1. An entity engaged in sale and/or distribution of Mutual Fund products,
shall also be eligible to offer products under the SIF, subject to such
entity having passed National Institute of Securities Markets (‘NISM’)
Series-XIII: Common Derivatives Certification Examination.
21.10.2. AMFI and the AMCs shall ensure compliance with the above
requirement by their agents and distributors.
21.11. Disclosure in offer documents
21.11.1. The following information shall be disclosed in the offer documents to
enable the investors and unit holders to take an informed decision:
(a) Redemption and subscription frequency of the investment
strategy.
(b) Notice period of the investment strategy, if any.
(c) Frequency of portfolio disclosure.
(d) Scenario analysis for derivative positions.
(e) Investment in derivatives along with the maximum limit on
investment in derivatives for other than hedging and portfolio
rebalancing exposure.
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(f) Liquidity risk management tools and their applicability.
(g) Any other relevant information.
21.11.2. The format of Investment Strategy Information Document (ISID) is
provided at Format No. 5D.
21.12. Risk-Band
21.12.1. Similar to Mutual Fund schemes, the potential risk associated with the
investment strategies of the SIF shall be depicted through a pictorial risk
meter, termed as “Risk-band.
21.12.2. The Risk-band shall have following five levels of risks for investment
strategies of SIF:
(a) Risk band level 1 (Lowest risk)
(b) Risk band level 2
(c) Risk band level 3
(d) Risk band level 4
(e) Risk band level 5 (Highest Risk)
21.12.3. The detailed standards regarding Risk-Band including the depiction,
evaluation and calculation of risk levels of the Risk-Band has been
issued by AMFI.
21.12.4. Based on the scheme characteristics, SIF shall assign risk level for
schemes at the time of launch of NFO of the investment strategy.
21.12.5. Any change in risk band shall be communicated by way of Notice cum
Addendum and by way of an e-mail or SMS to unitholders of that
particular investment strategy.
21.12.6. Risk-band shall be evaluated on a monthly basis and SIF/AMCs shall
disclose the risk-band for all their investment strategies on their
respective websites and on website of AMFI within 10 calendar days
from the close of each month.
21.12.7. SIFs shall disclose the risk level of investment strategies as on March
31st of every year, along with number of times the risk level has changed
over the year, on their websites and AMFI website.
21.13. Disclosure requirements
21.13.1. Portfolio Disclosure
The SIF shall disclose portfolio (along with ISIN), including derivative
instruments, as on the last day of every alternate month (i.e. as on the
end of May, July, September, November, January and March) for all its
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investment strategies (including debt based investment strategies) on
the respective AMC website and on the website of AMFI within 10
calendar days from the close of such month in a user friendly and
downloadable spreadsheet format. All other provisions regarding
portfolio disclosure applicable to Mutual Fund schemes, shall also be
applicable to the investment strategies under the SIF.
21.13.2. Scenario analysis:
The Investment Strategy Information Document (ISID) shall include a
scenario analysis, depicting the expected loss to the investor due to
market movements. AMFI, in consultation with SEBI, has prescribed a
model format for scenario analysis.
21.13.3. Offer documents:
21.13.4. All offer documents (i.e. ISID/SAI/KIM) shall be available publicly and
also on the website of the SIF and AMFI.
21.13.5. Standard disclaimer:
(a) All advertisements and promotional materials shall be accompanied by
a standard warning in a legible font which shall state:
“Investments in Specialized Investment Fund involves relatively higher
risk including potential loss of capital, liquidity risk and market volatility.
Please read all investment strategy related documents carefully before
making the investment decision.”
(b) No addition or deletion of words shall be made to the standard
disclaimer.
21.13.6. The Stock Exchanges, Clearing Corporations and Depositories are
directed to:
(a) take necessary steps and put in place necessary systems for the
implementation of the above provisions;
(b) make necessary amendments to the relevant bye-laws, rules and
regulations, wherever applicable, for the implementation of the
above provisions;
(c) bring the above provisions to the notice of market participants and
also disseminate the same on their website.
21.14. Reporting requirements455
21.14.1. All reporting requirements applicable to mutual funds under the MF
Regulations, this Master Circular, and any other circulars or guidelines
455 SEBI Circular No. HO/24/13/12(4)2025-IMD-POD-1/I/2062/2026 dated January 08, 2026
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issued thereunder, shall also apply to Specialized Investment Funds,
unless specified otherwise.
21.14.2. All AMCs managing SIF shall additionally report compliance under Part
IV as part of the CTR submitted for Mutual Funds.
21.14.3. The Trustees/Trustee Companies of Mutual Funds managing SIF shall
additionally report compliance under clause 78 as part of the HYTR
submitted for Mutual Funds.
21.15. Exemptions for SIF
21.15.1. The provisions under Paragraph 3.6.2(d) of this Master Circular,
regarding maturity of securities in interval schemes, shall not be
applicable to Interval Investment Strategies under SIF456.
456 SEBI Circular No. SEBI/HO/IMD/IMD-I POD1/P/CIR/2025/54 dated April 09, 2025
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CHAPTER 22: MISCELLANEOUS
22.1. Common fund manager under Regulation 21457
22.1.1. In terms of Regulation 21 (b)(vi), the replication of minimum 70% of
portfolio value shall be considered as adequate for the purpose of
compliance with the said provision, provided that AMC has in place a
written policy for trade allocation and it ensures at all points of time that
the fund manager shall not take directionally opposite positions in the
schemes managed by him.
22.1.2. Where a fund manager is common across the mutual fund schemes and
schemes/products under other permissible activities of AMC, then the
AMC shall:
(a) Disclose on its website, the returns of all the schemes (mutual
fund, pension funds, offshore funds etc.) managed by the said
manager, on a monthly basis.
(b) In case any performance advertisement is issued by the AMC for
any scheme, then the details of returns of all the schemes (mutual
fund, pension funds, offshore funds etc.) managed by that fund
manager shall be provided.
(c) In case the difference between the annual returns provided by all
the schemes managed by the same fund manager is more than
10% then the same shall be reported to the trustee and explanation
for the same shall be disclosed on the website of the AMC.
22.2. Management and advisory services by AMCs to Foreign Portfolio
Investors458
22.2.1. AMCs may provide management and advisory services in terms of
Regulation 21(b) to FPIs falling under the following categories of FPIs
as specified in SEBI (Foreign Portfolio Investors) Regulations, 2019:
(a) Government and Government related investors such as central
banks, sovereign wealth funds, international or multilateral
organizations or agencies including entities controlled or at least
75% directly or indirectly owned by such Government and
Government related investor(s);
(b) Appropriately regulated entities such as pension funds, insurance
or reinsurance entities, banks and mutual funds;
457 SEBI Circular No. Cir/IMD/DF/7/2012 dated February 28, 2012
458 SEBI Circular No. SEBI/HO/IMD/IMD-POD1/P/CIR/2023/005 dated January 06, 2023 & SEBI Circular No.
SEBI/HO/IMD/DF2/CIR/P/2019/155 dated December 16, 2019
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(c) Appropriately regulated FPIs wherein (a) or (b) above hold more
than 50% of shares/ units.
22.2.2. AMCs may also provide management and advisory services to FPIs
operating from International Financial Centres (IFSC) and regulated by
International Financial Services Centres Authority (IFSCA) and falling
under the aforesaid categories.
22.2.3. Further, AMCs may also provide management and advisory services to
FPIs operating from IFSC and regulated by IFSCA, not falling under the
categories of FPIs specified under Paragraph 22.2.1 above, subject to
the following:
(a) Such FPIs shall be allowed to invest in Mutual Fund schemes other
than the schemes in the category of “thematic” as defined in Part
IV of Chapter 3 of this Master Circular.
(b) For investment in equity and equity derivative securities listed on
recognized stock exchanges in India, such FPI shall not take
contra-position for a period of six months from the date of purchase
or sale of such securities.
22.2.4. The proviso to Regulation 21(b)(vi) shall be applicable for the categories
of FPIs as mentioned under Paragraph 22.2.1 above.
22.3. 459Limited Purpose Clearing Corporation (“LPCC”) by AMCs:
22.3.1. The LPCC has been set up for clearing and settling repo transactions in
corporate debt securities, in accordance with the provisions of SEBI
Circular No. SEBI/HO/IMD/DF2/CIR/P/202117 dated February 02, 2021
and SEBI Circular No. SEBI/HO/IMD/IMD-1 DOF2/P/CIR/2021/0548
dated April 06, 2021.
22.4. 460Mode of Payments and Despatch:
22.4.1. AMCs may use instruments or payment channels such as cheque,
demand draft, dividend warrants, RTGS, NEFT, IMPS, direct credit, etc.
or any other mode allowed by RBI from time to time, for payments
including refunds to unitholders.
22.4.2. Further, AMCs may also use modes of dispatch such as speed post,
courier etc. for payments including refunds to unitholders in addition to
the registered post with acknowledgement due.
22.5. 461Maintenance of Current Accounts in multiple banks by Mutual Funds:
459 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/202117 dated February 02, 2021
460 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021
461 SEBI Circular No. SEBI/HO/IMD/IMD-I/DOF5/P/CIR/2021/610 dated August 04, 2021
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22.5.1. Mutual funds shall maintain current accounts in an appropriate number
of banks for the purpose of receiving subscription amount and for
payment of redemption / dividend / brokerage / commission etc. to
facilitate financial inclusion, convenience of investors and ease of doing
business.
22.6. 462Guidelines on Accounting with respect to Indian Accounting
Standards (IND AS):
22.6.1. AMCs shall prepare the Financial Statements and Accounts of the
Mutual Fund Schemes in accordance with IND AS.
22.6.2. Accordingly, Mutual Fund Schemes shall prepare the opening balance
sheet as on date of transition and the comparatives as per the
requirements of IND AS.
22.6.3. Perspective historical per unit statistics mentioned in Clause 6 of Ninth
Schedule of MF Regulations requires disclosure of scheme wise per unit
statistics for the past 3 years. In this regard, Mutual Fund schemes may
not be mandatorily required to restate the previous years published
perspective historical per unit statistics as per requirement of IND AS for
the first two years from first time adoption of IND AS. However, Mutual
Fund schemes shall furnish following additional information in
perspective historical per unit statistics:
(a) Label the previous Generally Accepted Accounting Principles
(GAAP) information prominently as not being prepared in
accordance with IND AS; and
(b) Disclose the nature of the adjustments that would be required to
make it comply with IND AS. Mutual Funds schemes need not
quantify those adjustments.
22.6.4. The Financial Statements of the Mutual Fund Schemes shall be
prepared as per Format No. 4E.
22.7. Clearing and Settlement of OTC trades in Commercial Paper (CPs) &
Certificates of Deposit (CDs)463:
22.7.1. All SEBI regulated entities shall settle their OTC trades in CDs and CPs
on the lines of the process for settlement of OTC trades in corporate
bonds, through National Securities Clearing Corporation Limited
(NSCCL) and Indian Clearing Corporation Limited (ICCL). All
transactions cleared and settled in this regard, will be subject to such
norms as may be specified by NSCCL and ICCL.
462 SEBI circular no SEBI/HO/IMD-II/DOF8/P/CIR/2022/12 dated February 04, 2022
463 SEBI circular no Cir. /IMD/DF/8/2012 dated March 05, 2012, Refer SEBI email dated December 30, 2009
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22.8. Disclosure requirement for AMCs464
22.8.1. In terms of Regulation 2(1)(d), AMCs shall disclose scheme wise
investments, as on the last day of each quarter, in securities of such
entities that are excluded from the definition of associate.
22.8.2. In this regard, the disclosure of Investment shall include ISIN wise value
of investment and value as percentage of AUM of scheme. Such
disclosure shall be made on the websites of respective AMCs and on
the website of AMFI, within one month from the close of each quarter.
22.9. 465Postal Ballot:
22.9.1. As per the existing provisions of the MF Regulations and various
circulars issued thereunder, wherever consent or approval of
unitholders is required, an option shall be given to unitholders. In this
regard, it is clarified that the same can also be done through Postal
Ballot mechanism.
22.9.2. For this purpose, voting through Postal Ballot shall mean voting by post
or through any electronic mode.
22.10. 466Exit period for Unitholders:
22.10.1. In order to bring uniformity, wherever exit option is required to be given
to unitholders under the MF Regulations and circulars issued
thereunder, unitholders shall be given a time period of at least 30
calendar days for the purpose of exercising the exit option, unless
mentioned otherwise.
22.11. Updating contact details
22.11.1. AMCs shall make continuous efforts to update email ID and mobile
number of all unit holders. The said contact details shall be used for
sending e-mails and SMS467.
**********
464 SEBI Circular No. SEBI/HO/IMD/DOF2/P/CIR/2022/111 dated August 25, 2022
465 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021
466 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021
467 SEBI/HO/IMD/DF2/CIR/P/2018/92 dated June 05, 2018
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APPENDIX: LIST OF RESCINDED CIRCULARS
SR. CIRCULAR NO. DATE SUBJECT
NO.
1. HO /(92)2026-IMD-POD- March 13, 2026 Borrowing by Mutual Funds
2/I/6961/2026
2. HO /24/12/12(5)2026-IMD- March 06, 2026 Introduction of Voluntary Lock-in / Debit freeze
SEC-1/I/6373/2026 facility to Mutual Fund folios
3. HO /(68)2026-IMD-POD- February 26, 2026 Valuation of physical Gold and Silver held by
2/I/5780/2026 mutual fund schemes
4. HO /24/13/15(2)2026-IMD- February 26, 2026 Categorization and Rationalization of Mutual
RAC4/I/5764/2026 Fund Schemes
5. HO /24/13/12(4)2025-IMD- January 08, 2026 Compliance reporting formats for Specialized
POD-1/I/2062/2026 Investment Funds (SIF)
6. HO /(83)2025-IMD-POD- January 07, 2026 Extension of timeline for implementation of
1/I/2027/2026 additional incentives structure for distributors
for onboarding new individual investors from
B-30 cities and women investors
7. HO /24/13/12(1)2025-IMD- November 28, 2025 Reclassification of Real Estate Investment
POD-2/I/157/2025 Trusts (REITs) as equity related instruments
for facilitating enhanced participation by
Mutual Funds and Specialized Investment
Funds (SIFs)
8. HO /(83)2025-IMD-POD- November 27, 2025 Additional incentives to distributors for
1/I/152/2025 onboarding new individual investors from B-30
cities and women investors
9. SE BI/HO/IMD/IMD-PoD- August 08, 2025 Transaction charges paid to Mutual Fund
1/P/CIR/2025/115 Distributors
10. SE BI/HO/IMD/IMD-PoD- July 29, 2025 Monitoring of Minimum Investment Threshold
1/P/CIR/2025/107 under Specialized Investment Funds (SIF)
11. SE BI/HO/IMD/PoD2/P/CIR/2 June 26, 2025 Timelines for rebalancing of portfolios of
025/92 mutual fund schemes in cases of all passive
breaches
12. SE BI/HO/IMD/PoD2/P/CIR/2 April 22, 2025 Change in cut-off timings to determine
025/56 applicable NAV with respect to repurchase/
redemption of units in overnight schemes of
Mutual Funds
13. SE BI/HO/IMD/IMD- April 11, 2025 Specialized Investment Funds (‘SIF’) –
RAC/P/CIR/2025/54 Application and Investment Strategy
Information Document (ISID) formats
14. SE BI/HO/IMD/IMD-PoD- April 09, 2025 Clarification on Regulatory framework for
1/P/CIR/2025/53 Specialized Investment Funds (‘SIF’)
15. SE BI/HO/IMD/IMD-PoD- March 28, 2025 Extension of timelines for submission of offsite
1/P/CIR/2025/38 inspection data
16. SE BI/HO/IMD/IMD-PoD- March 21, 2025 Facilitating ease of doing business relating to
1/P/CIR/2025/36 the framework on “Alignment of interest of the
Designated Employees of the Asset
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Management Company (AMC) with the
interest of the unitholders”
17. SE BI/HO/IMD/IMD-PoD- February 27, 2025 Regulatory framework for Specialized
1/P/CIR/2025/26 Investment Funds (‘SIF’)
18. SE BI/HO/IMD/IMD-PoD- February 27, 2025 Timelines for deployment of funds collected by
1/P/CIR/2025/23 Asset Management Companies (AMCs) in
New Fund Offer (NFO) as per asset allocation
of the scheme
19. SE BI/HO/IMD/PoD1/P/CIR/2 February 20, 2025 Clarification regarding Investor Education and
025/21 Awareness Initiatives
20. SE BI/HO/IMD/IMD-SEC- February 12, 2025 Service platform for investors to trace inactive
3/P/CIR/2025/15 and unclaimed Mutual Fund folios- MITRA
(Mutual Fund Investment Tracing and
Retrieval Assistant)
21. SE BI/HO/IMD/IMD-PoD- January 17, 2025 Disclosure of Risk adjusted Return -
2/P/CIR/2025/6 Information Ratio (IR) for Mutual Fund
Schemes
22. SE BI/HO/IMD/PoD2/P/CIR/2 December 31, 2024 Introduction of a Mutual Funds Lite (MF Lite)
024/183 framework for passively managed schemes of
Mutual Funds
23. SE BI/HO/IMD/IMD-RAC- December 20, 2024 Upload of Draft Scheme Information
1/P/CIR/2024/179 Documents
24. SE BI/HO/IMD/PoD2/P/CIR/2 December 13, 2024 Classification of Corporate Debt Market
024/174 Development Fund (CDMDF) as Category I
Alternative Investment Fund
25. SE BI/HO/IMD/IMD-I PoD- November 26, 2024 Valuation of repurchase (repo) transactions by
1/P/CIR/2024/163 Mutual Funds
26. SE BI/HO/IMD/PoD1/CIR/P/2 November 05, 2024 Disclosure of expenses, half yearly returns,
024/150 yield and risk-o-meter of schemes of Mutual
Funds
27. SE BI/HO/IMD/IMD-PoD- November 04, 2024 Investments in Overseas Mutual Funds/ Unit
1/P/CIR/149 Trusts by Indian Mutual Funds
28. SE BI/HO/IMD/IMD-PoD- October 22, 2024 Inclusion of Mutual Fund units in the SEBI
1/P/CIR/2024/144 (Prohibition of Insider Trading) Regulations,
2015
29. SE BI/HO/IMD/PoD2/P/CIR/2 September 20, 2024 Flexibility in participation of Mutual Funds in
024/125 Credit Default Swaps (CDS)
30. SE BI/HO/IMD/PoD1/CIR/P/2 August 05, 2024 Valuation of Additional Tier 1 Bonds (“AT-1
024/106 Bonds”)
31. SE BI/HO/IMD/IMD-PoD- August 05, 2024 Institutional mechanism by Asset Management
1/P/CIR/2024/107 Companies for identification and deterrence of
potential market abuse including front-running
and fraudulent transactions in securities
32. SE BI/HO/IMD/IMD-PoD- July 08, 2024 Ease of doing business - Streamlining of
2/P/CIR/2024/098 prudential norm for passive schemes
regarding exposure to securities of group
companies of the sponsor of Mutual Funds
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33. SE BI/HO/IMD/IMD-PoD- April 30, 2024 Nomination for Mutual Fund Unit Holders –
1/P/CIR/2024/29 exemption for jointly held folios
34. SE BI/HO/IMD/IMD-PoD- April 30, 2024 Ease of doing business- Fund manager for
2/P/CIR/2024/30 Mutual fund schemes investing in commodities
and overseas securities.
35. SE BI/HO/IMD/IMD-RAC- March 12, 2024 Simplification and streamlining of Offer
2/P/CIR/2024/000015 Documents of Mutual Fund Schemes –
Extension of timelines
36. SE BI/HO/IMD/IMD-RAC- November 01, 2023 Simplification and streamlining of Offer
2/P/CIR/2023/000175 Documents of Mutual Fund Schemes
37. SE BI/HO/IMD/PoD2/P/CIR/2 September 27, 2023 Clarification regarding investment of Mutual
023/152 Fund schemes in units of Corporate Debt
Market Development Fund
38. SE BI/HO/IMD/IMD-I September 06, 2023 Nomination for Mutual Fund Unit Holders –
POD1/P/CIR/2023/160 Extension of timelines
39. SE BI/HO/IMD/IMD-PoD- August 11, 2023 Timeline for the Exit Option Window Period for
2/P/CIR/2023/142 Change in Control of AMC
40. SE BI/HO/IMD/PoD2/P/CIR/2 July 27, 2023 Framework for Corporate Debt Market
023/128 Development Fund (CDMDF)
41. SE BI/HO/IMD/PoD2/P/CIR/2 July 27, 2023 Investment by Mutual Fund Schemes and
023/129 AMCs in units of Corporate Debt Market
Development Fund
42. SE BI/HO/IMD/IMD-I – July 26, 2023 Resources for Trustees of Mutual Funds
PoD1/P/CIR/2023/126
43. SE BI/HO/IMD/IMD-I – July 20, 2023 New category of Mutual Fund schemes for
PoD1/P/CIR/2023/125 Environmental, Social and Governance
(“ESG”) Investing and related disclosures by
Mutual Funds
44. SE BI/HO/IMD/IMD-PoD- July 07, 2023 Regulatory Framework for Sponsors of a
2/P/CIR/2023/118 Mutual Fund
45. SE BI/HO/IMD/IMD-PoD- July 07, 2023 Roles and responsibilities of Trustees and
1/P/CIR/2023/117 board of directors of Asset Management
Companies (AMCs) of Mutual Funds
46. SE BI/HO/IMD/IMD PoD- June 13, 2023 Corrigendum to Circular on Participation of
2/P/CIR/2023/87 Mutual funds in repo transactions on
Corporate Debt Securities dated June 8, 2023
47. SE BI/HO/IMD/IMD-PoD- June 13, 2023 Regulatory framework for Execution Only
1/P/CIR/2023/86 Platforms for facilitating transactions in direct
plans of schemes of Mutual Funds
48. SE BI/HO/IMD/IMD PoD- June 8, 2023 Participation of Mutual funds in repo
2/P/CIR/2023/85 transactions on Corporate Debt Securities
49. SE BI/HO/IMD/POD- May 12, 2023 Investment in units of Mutual Funds in the
II/CIR/P/2023/0069 name of minor through guardian
50. SE BI/HO/IMD/IMD-RAC- April 25, 2023 Modifications in the requirement of filing of
2/P/CIR/2023/60 Offer Documents by Mutual Funds
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51. SE BI/HO/IMD/IMD-I March 29, 2023 Review of time limit for disclosure of NAV of
POD2/P/CIR/2023/48 Mutual fund schemes investing overseas
52. SE BI/HO/IMD/IMD-I March 28, 2023 Nomination for Mutual Fund Unit Holders –
POD1/P/CIR/2023/47 Extension of timelines
53. SE BI/HO/IMD/IMD-PoD- March 23, 2023 E-wallet investments in Mutual Funds
2/P/CIR/2023/40
54. SE BI/HO/IMD/IMD- January 06, 2023 Management and advisory services by AMCs
POD1/P/CIR/2023/005 to Foreign Portfolio Investors
55. SE BI/HO/IMD/IMD-1 November 29, 2022 Introduction of credit risk based single issuer
DOF2/P/CIR/2022/164 limit for investment by mutual fund schemes in
debt and money market instruments
56. SE BI/HO/IMD/IMD-I November 25, 2022 Timelines for transfer of dividend and
DOF2/P/CIR/2022/161 redemption proceeds to unitholders
57. SE BI/HO/IMD/DOF2/P/CIR/2 October 28, 2022 Addendum to SEBI Circular on Development
022/145 of Passive Funds
58. SE BI/HO/IMD/IMD-I September 30, 2022 Two-Factor Authentication for transactions in
DOF1/P/CIR/2022/132 units of Mutual Funds
59. SE BI/HO/IMD/DOF2/P/CIR/2 August 25, 2022 Disclosure requirement for Asset Management
022/111 Companies (AMCs)
60. SE BI/HO/IMD/IMD-I July 29, 2022 Nomination for Mutual Fund Unit Holders –
DOF1/P/CIR/2022/105 Extension of timelines
61. SE BI/HO/IMD/DF2/CIR/P/20 July 28, 2022 Addendum to SEBI Circular on Development
22/102 of Passive Funds
62. SE BI/HO/IMD/IMD-II June 15, 2022 Nomination for Mutual Fund Unit Holders
DOF3/P/CIR/2022/82
63. SE BI/HO/IMD/IMD- June 09, 2022 Modification in Cyber Security and Cyber
I/DOF2/P/CIR/2022/81 Resilience Framework of Mutual Funds/ Asset
Management Companies (AMCs)
64. SE BI/HO/IMD/DOF2/P/CIR/2 May 23, 2022 Circular on Development of Passive Funds
022/69
65. SE BI/HO/IMD/IMD-II April 11, 2022 Risk value of commodities for Risk-o-meter
DOF3/P/CIR/2022/49
66. SE BI/HO/IMD/IMD-I March 31, 2022 Discontinuation of usage of pool accounts for
DOF5/P/CIR/2022/41 transactions in the units of Mutual Funds, Two
Factor Authentication (‘2FA’) for redemption
and other related requirements: Extension of
timeline
67. SE BI/HO/IMD/IMD-II March 30, 2022 Timelines for Rebalancing of Portfolios of
DOF3/P/CIR/2022/39 Mutual Fund Schemes
68. SE BI/HO/IMD/IMD-I March 15, 2022 Discontinuation of usage of pool accounts for
DOF5/P/CIR/2022/29 transactions in the units of Mutual Funds:
Clarifications with respect to Circulars dated
October 4, 2021
69. SE BI/HO/IMD/IMD-II February 25, 2022 Swing pricing framework for mutual fund
DOF3/P/CIR/2022/24 schemes – Extension of timeline
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70. SE BI/HO/IMD/IMD-I February 09, 2022 Audit Committee of Asset Management
DOF2/P/CIR/2022/17 Companies (AMCs)
71. SE BI/HO/IMD- February 04, 2022 Guidelines on Accounting with respect to
II/DOF8/P/CIR/2022/12 Indian Accounting Standards (IND AS)
72. SE BI/HO/IMD/IMD-I January 31, 2022 Change in control of the asset management
DOF5/P/CIR/2022/10 company involving scheme of arrangement
under Companies Act, 2013
73. SE BI/HO/IMD/IMD-II December 22, 2021 Restoration of relaxed timelines w.r.t. validity
DOF3/P/CIR/2021/698 of observation letter pertaining to Mutual
Funds
74. SE BI/HO/IMD/DF2/CIR/P/20 December 10, 2021 Circular on Mutual Funds
21/683
75. SE BI/HO/IMD-II/IMD- December 10, 2021 Publishing Investor Charter and disclosure of
II_DOF10/P/CIR/2021/00677 Investor Complaints by Mutual Funds on their
website and AMFI website
76. SE BI/HO/IMD/DF2/CIR/P/20 November 24, 2021 Norms for Silver Exchange Traded Funds
21/668 (Silver ETFs) and Gold Exchange Traded
Funds (Gold ETFs)
77. SE BI/HO/IMD/IMD- October 28, 2021 Investment/ trading in securities by employees
I/DOF5/P/CIR/2021/654 and Board members of AMC(s) and Trustees
of Mutual Funds
78. SE BI/HO/IMD/IMD-II October 27, 2021 Guiding Principles for bringing uniformity in
DF3/P/CIR/2021/652 Benchmarks of Mutual Fund Schemes
79. SE BI/HO/IMD/IMD-II October 06, 2021 Minimum percentage of trades carried out by
DOF3/P/CIR/2021/641 Mutual Funds through RFQ platform
80. SE BI/HO/IMD/IMD-I October 04, 2021 Circular on Mutual Funds
DOF5/P/CIR/2021/634
81. SE BI/HO/IMD/IMD-I October 04, 2021 Discontinuation of usage of pool accounts for
DOF5/P/CIR/2021/635 transactions in units of Mutual Funds on Stock
Exchange platforms
82. SE BI/HO/IMD/IMD-II September 29, 2021 Swing pricing framework for Mutual Fund
DOF3/P/CIR/2021/631 schemes
83. SE BI/HO/IMD/IMD-1 September 27, 2021 Risk Management Framework (RMF) for
DOF2/P/CIR/2021/630 Mutual Funds
84. SE BI/HO/IMD/IMD- September 20, 2021 Clarification with respect to Circular dated
I/DOF5/P/CIR/2021/629 April 28, 2021 on 'Alignment of Interest of Key
Employees ('Designated Employees') of Asset
Management Companies (AMCs) with the
Unitholders of the Mutual Fund schemes
85. SE BI/HO/IMD/IMD- September 02, 2021 Alignment of interest of Key Employees of
IDOF5/P/CIR/2021/624 Asset Management Companies (AMCs) with
the unitholders of the Mutual Fund schemes
86. SE BI/HO/IMD/IMD-II August 31, 2021 Disclosure of Risk-o-Meter of scheme,
DOF3/P/CIR/2021/621 benchmark and portfolio details to the
investors
87. SE BI/HO/IMD/IMD- August 04, 2021 Maintenance of current accounts in multiple
I/DOF5/P/CIR/2021/610 banks by Mutual Funds
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88. SE BI/HO/IMD/IMD-II July 30, 2021 Deployment of unclaimed redemption and
DOF3/P/CIR/2021/608 dividend amounts and instant access facility in
Overnight Funds
89. SE BI/HO/IMD/IMD- July 30, 2021 Intra-Day Net Assets Value (NAV) for
I/DOF5/P/CIR/2021/0606 Transactions in Units of Exchange Traded
Funds directly with Asset Management
Companies
90. SE BI/HO/IMD/IMD-II July 26, 2021 RTA inter-operable Platform for enhancing
DOF3/P/CIR/2021/604 investors' experience in Mutual Fund
transactions/ service requests
91. SE BI/HO/IMD/IMD-II July 23, 2021 Timelines related to processing of scheme
DOF3/P/CIR/2021/603 related applications filed by AMCs
92. SE BI/HO/IMD/DF4/P/CIR/20 July 09, 2021 Valuation of securities with multiple put
21/593 options present ab-initio
93. SE BI/HO/IMD/IMD- June 25, 2021 Alignment of interest of Key Employees of
I/DOF5/P/CIR/2021/582 Asset Management Companies (AMCs) with
the unitholders of the Mutual Fund schemes
94. SE BI/HO/IMD/IMD-II June 25, 2021 Prudential norms for liquidity risk management
DOF3/P/CIR/2021/583 for open ended debt schemes
95. SE BI/HO/IMD/IMD-I June 18, 2021 Norms for investment and disclosure by
DOF2/P/CIR/2021/580 mutual funds in derivatives
96. SE BI/HO/IMD/IMD-II June 07, 2021 Potential Risk Class Matrix for debt schemes
DOF3/P/CIR/2021/573 based on Interest Rate Risk and Credit Risk
97. SE BI/HO/IMD/IMD- June 03, 2021 Enhancement of Overseas Investment limits
II/DOF3/P/CIR/2021/571 for Mutual Funds
98. SE BI/HO/IMD/IMD-II May 31, 2021 Disclosure of the following only w.r.t schemes
DOF3/P/CIR/2021/566 which are subscribed by the investor:
a. risk-o-meter of the scheme and the
benchmark along with the performance
disclosure of the scheme vis-à-vis benchmark
and
b. Details of the portfolio
99. SE BI/HO/IMD/IMD-I April 30, 2021 Timelines for updation of Scheme Information
DOF2/P/CIR/2021/0560 Document (SID) and Key Information
Memorandum (KIM)
100. SE BI/HO/IMD/IMD-II April 29, 2021 Disclosure of the following only w.r.t schemes
DOF3/P/CIR/2021/555 which are subscribed by the investor:
a. risk-o-meter of the scheme and the
benchmark along with the performance
disclosure of the scheme vis-à-vis benchmark
and
b. Details of the portfolio
101. SE BI/HO/IMD/IMD- April 28, 2021 Alignment of interest of Key Employees of
I/DOF5/P/CIR/2021/553 Asset Management Companies (AMCs) with
the unitholders of the Mutual Fund schemes
102. SE BI/HO/IMD/IMD-I April 12, 2021 Circular on Reporting Formats for Mutual
DOF2/P/CIR/2021/550 Funds
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103. SE BI/HO/IMD/IMD-1 April 06, 2021 Setting Up Limited Purpose Clearing
DOF2/P/CIR/2021/0548 Corporation (LPCC) by Asset Management
Companies (AMCs) of Mutual Funds
104. SE BI/HO/IMD/DF4/CIR/P/20 March 22, 2021 Clarification on the valution of bonds issued
21/034 under Basel III framework
105. SE BI/HO/IMD/DF4/CIR/P/20 March 10, 2021 Review of norms regarding investment in debt
21/032 instruments with special features, and the
valuation of perpetual bonds
106. SE BI/HO/IMD/DF4/CIR/P/20 March 05, 2021 Guidelines for votes case by Mutual Funds
21/29
107. SE BI/HO/IMD/DF2/CIR/P/20 March 04, 2021 Circular on Mutual Funds
21/024
108. SE BI/HO/IMD/DF2/CIR/P/20 February 02, 2021 Setting Up Limited Purpose Clearing
21/17 Corporation (LPCC) by Asset Management
Companies (AMCs) of Mutual Funds
109. SE BI/HO/IMD/DF3/CIR/P/20 January 29, 2021 Revision of Monthly Cumulative Report (MCR)
21/014
110. SE BI/HO/IMD/DF2/CIR/P/20 January 15, 2021 Norms for investment and disclosure by
21/10 Mutual Funds in Exchange traded commodity
derivatives ("ETCDs")
111. SE BI/HO/IMD/DF2/CIR/P/20 December 31, 2020 Circular on Mutual Funds
20/253
112. SE BI/HO/IMD/DF3/CIR/P/20 November 06, 2020 Introduction of "Flexi Cap Fund" as a new
20/228 category under Equity schemes
113. SE BI/HO/IMD/DF3/CIR/P/20 November 06, 2020 Norms regarding holding of liquid assets in
20/229 open ended debt schemes & stress testing of
open ended debt schemes
114. SE BI/HO/IMD/DF3/CIR/P/20 November 05, 2020 Enhancement of Overseas Investment limits
20/225 for Mutual Funds
115. SE BI/HO/IMD/DF4/CIR/P/20 October 08, 2020 Guidelines for Inter-scheme Transfers of
20/202 October securities
116. SE BI/HO/IMD/DF3/CIR/P/20 October 05, 2020 Product Labelling in Mutual Fund schemes -
20/197 Risk-o-meter
117. SE BI/HO/IMD/DF3/CIR/P/20 October 05, 2020 Review of Dividend options(s)/ Plan(s) in case
20/194 of Mutual Fund schemes
118. SE BI/HO/IMD/DF4/CIR/P/20 October 01, 2020 Review of provisions regarding valuation of
20/192 debt and money market instruments due to the
COVID - 19 pandemic
119. SE BI/HO/IMD/DF4/CIR/P/20 September 23, 2020 Resources for Trustees of Mutual Funds
20/178
120. SE BI/HO/IMD/DF2/CIR/P/20 September 17, 2020 Circular on Mutual Funds
20/175
121. SE BI/HO/IMD/DF3/CIR/P/20 September 11, 2020 Asset Allocation of Multi Cap Funds
20/172
122. SE BI/HO/IMD/DF4/CIR/P/20 September 02, 2020 Review of provision regarding segregation of
20/165 portfolio due to COVID-19 pandemic
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123. SE BI/HO/IMD/DF4/CIR/P/20 September 01, 2020 Review of debt and money market securities
20/163 transactions disclosure
124. SE BI/HO/IMD/DF4/CIR/P/20 August 10, 2020 Resources for Trustees of Mutual Funds
20/0000000151
125. SE BI/HO/IMD/DF3/CIR/P/20 July 22, 2020 Transaction in Corporate Bonds/Commercial
20/130 Papers through RFQ platform and enhancing
transparency pertaining to debt schemes
126. SE BI/HO/IMD/DF4/CIR/P/20 June 12, 2020 Investment by sponsor or asset management
20/100 company in the scheme
127. SE BI/HO/IMD/DF2/CIR/P/20 June 05, 2020 Participation of Mutual Funds in Commodity
20/96 Derivatives Market in India
128. SE BI/HO/IMD/DF3/CIR/P/20 May 20, 2020 Listing of Mutual Fund schemes that are in the
20/086 process of winding up
129. SE BI/HO/IMD/DF3/CIR/P/20 April 30, 2020 Relaxation in compliance with requirements
20/76 pertaining to Mutual Funds
130. SE BI/HO/IMD/DF2/CIR/P/20 April 28, 2020 Existing grandfathered unlisted NCDs
20/75
131. SE BI/HO/IMD/DF3/CIR/P/20 April 23, 2020 Review of provisions of the circular dated
20/70 September 24, 2019 issued under SEBI
(Mutual Funds) Regulations, 1996 due to the
COVID - 19 pandemic and moratorium
permitted by RBI
132. SE BI/HO/IMD/DF3/CIR/P/20 March 23, 2020 Relaxation in certain compliance with
20/47 requirements pertaining to Mutual Funds
133. SE BI/HO/IMD/DF3/CIR/P/20 December 24, 2019 Investment in units of Mutual Funds in the
19/166 name of minor through guardian and ease of
process for transmission of units
134. SE BI/HO/IMD/DF2/CIR/P/20 December 16, 2019 Management and advisory services by AMCs
19/155 to Foreign Portfolio Investors
135. SE BI/HO/IMD/DF3/CIR/P/20 December 10, 2019 Review of investment norms for mutual funds
19/152 for investment in Debt and Money Market
Instruments
136. SE BI/HO/IMD/DF3/CIR/P/20 November 29, 2019 Norms for Debt Exchange Traded Funds
19/147 (ETFs)/Index Funds
137. SE BI/HO/IMD/DF2/CIR/P/20 November 07, 2019 Creation of segregated portfolio in mutual fund
19/127 schemes
138. SE BI/HO/IMD/DF4/CIR/P/20 November 06, 2019 Reporting of changes in terms of investment
19/126
139. SE BI/HO/IMD/DF2/CIR/P/20 October 01, 2019 Review of investment norms for mutual funds
19/104 for investment in Debt and Money Market
Instruments
140. SE BI/HO/IMD/DF4/CIR/P/20 September 24, 2019 Valuation of money market and debt securities
19/102
141. SE BI/HO/IMD/DF2/CIR/P/20 September 20, 2019 Risk Management Framework for Liquid &
19/101 Overnight Funds and norms governing
investment in short term deposits
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142. SE BI/HO/IMD/DF4/CIR/P/20 August 16, 2019 Parking of Funds in Short Term Deposits of
19/093 Scheduled Commercial Banks by Mutual
Funds - Pending deployment
143. SE BI/HO/IMD/DF2/CIR/P/20 May 21, 2019 Participation of Mutual Funds in Commodity
19/65 Derivatives Market in India
144. SE BI/HO/IMD/DF5/CIR/P/20 May 09, 2019 Reporting for Artificial Intelligence (AI) &
19/63 Machine Learning (ML) Applications and
systems offered and used by Mutual Funds
145. SE BI/HO/IMD/DF2/CIR/P/20 April 11, 2019 Technology committee for Mutual Funds/
19/058 Asset Management Companies (AMCs)
146. SE BI/HO/IMD/DF2/CIR/P/20 April 11, 2019 System Audit Framework for Mutual Funds/
19/57 Asset Management Companies (AMCs)
147. SE BI/HO/IMD/DF2/CIR/P/20 March 25, 2019 Review of Commission, Expenses, Disclosure
19/42 norms etc. - Mutual Fund
148. SE BI/HO/IMD/DF4/CIR/P/20 March 22, 2019 Valuation of money market & debt securities
19/41
149. SE BI/HO/IMD/DF2/CIR/P/20 March 08, 2019 Filing of advertisements under SEBI (Mutual
19/34 Funds) Regulations, 1996
150. SE BI/HO/IMD/DF3/CIR/P/20 January 22, 2019 Revised Monthly Cumulative Report (MCR)
19/020
151. SE BI/HO/IMD/DF2/CIR/P/20 January 16, 2019 Norms for investment and disclosure by
19/17 mutual funds in derivatives
152. SE BI/HO/IMD/DF2/CIR/P/20 January 10, 2019 Cyber Security and Cyber Resilience
19/12 framework for Mutual Funds/ Asset
Management Companies (AMCs)
153. SE BI/HO/IMD/DF3/CIR/P/20 January 10, 2019 Portfolio Concentration Norms for Equity
19/011 Exchange Traded Funds (ETFs) and Index
Funds
154. SE BI/HO/IMD/DF2/CIR/P/20 December 28, 2018 Creation of segregated portfolio in mutual fund
18/160 schemes
155. SE BI/HO/IMD/DF2/CIR/P/20 October 22, 2018 Total Expenses Ratio (TER) and Performance
18/137 Disclosure for Mutual Funds
156. SE BI/HO/IMD/DF2/CIR/P/20 June 05, 2018 Total Expense Ratio for Mutual Funds
18/91
157. SE BI/HO/IMD/DF2/CIR/P/20 June 05, 2018 Circular on Go Green Initiative in Mutual
18/92 Funds
158. SE BI/HO/IMD/DF3/CIR/P/20 April 12, 2018 Performance disclosure post consolidation/
18/69 Merger of Schemes
159. SE BI/HO/IMD/DF2/CIR/P/20 February 07, 2018 Enhancing fund governance for Mutual Funds
18/19
160. SE BI/HO/IMD/DF2/CIR/P/20 February 05, 2018 Total Expense Ratio - change and disclosure
18/18
161. SE BI/HO/IMD/DF3/CIR/P/20 February 02, 2018 Charging of additional expenses of upto
18/15 0.20% in terms of Regulation 52 (6A) (c) of
SEBI (Mutual Funds) Regulations, 1996
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162. SE BI/HO/IMD/DF2/CIR/P/20 February 02, 2018 Review of additional expenses of up to 0.30%
18/16 towards inflows from beyond top 15 cities
(B15)
163. SE BI/HO/IMD/DF3/CIR/P/20 January 04, 2018 Benchmarking of Scheme’s performance to
18/04 Total Return Index
164. SE BI/HO/IMD/DF3/CIR/P/20 December 04, 2017 Categorization and rationalization of Mutual
17/126 Fund schemes
165. SE BI/HO/IMD/DF2/CIR/P/20 November 30, 2017 Enhancing fund governance for Mutual Funds
17/125
166. SE BI/HO/IMD/DF3/CIR/P/20 October 06, 2017 Categorization and rationalization of Mutual
17/114 Fund schemes
167. SE BI/HO/IMD/DF2/CIR/P/20 September 27, 2017 Review of norms for participation in derivatives
17/109 by Mutual Funds
168. SE BI/HO/IMD/DF3/CIR/P/20 June 01, 2017 Online Registration Mechanism for Mutual
17/52 Funds
169. SE BI/HO/IMD/DF2/CIR/P/20 May 08, 2017 Instant Access Facility & Use of e-wallet for
17/39 investment in Mutual Funds
170. SE BI/HO/IMD/DF2/CIR/P/20 April 28, 2017 Circular on Mutual Funds
17/35
171. CI R/IMD/DF/23/2017 March 15, 2017 Review of Advertisement guidelines for Mutual
Funds
172. SE BI/HO/IMD/DF2/CIR/P/20 February 28, 2017 Circular on Mutual Funds
17/17
173. SE BI/HO/IMD/DF2/CIR/P/20 February 22, 2017 Prudential limits in sector exposure for
17/14 Housing Finance Companies (HFCs)
174. SE BI/HO/IMD/DF2/CIR/P/20 February 20, 2017 Participation in derivatives market by Mutual
17/13 Funds
175. SE BI/HO/IMD/DF2/CIR/P/20 November 17, 2016 Investment/trading in securities by employees
16/124 of AMC(s) and Trustees of Mutual Funds
176. SE BI/HO/IMD/DF2/CIR/P/20 September 20, 2016 Consolidated Account Statement
16/89
177. SE BI/HO/IMD/DF2/CIR/P/20 August 10, 2016 Circular on Mutual Funds
16/68
178. SE BI/HO/IMD/DF2/CIR/P/20 May 31, 2016 Restriction on redemption in Mutual Funds
16/57
179. SE BI/HO/IMD/DF2/CIR/P/20 March 18, 2016 Circular on Mutual Funds
16/42
180. SE BI/HO/IMD/DF2/CIR/P/20 February 25, 2016 Circular on Mutual Funds
16/37
181. SE BI/HO/IMD/DF2/CIR/P/20 February 15, 2016 Circular on Mutual Funds
16/35
182. CI R/IMD/DF/11/2015 December 31, 2015 Investment by Gold ETFs in Gold Monetization
scheme of Banks
183. CI R/IMD/DF/03/2015 April 30, 2015 Stress Testing of Liquid Fund and Money
Market Mutual Fund Schemes
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184. CI R/IMD/DF/4/2015 April 30, 2015 Product Labelling in Mutual Funds
185. Ci r/ IMD/ DF/ 15 /2014 June 20, 2014 Minimum Asset under Management (AUM) of
Debt Oriented schemes
186. CI R/IMD/DF/10/2014 May 22, 2014 Circular on Mutual Funds
187. CI R/IMD/DF/07/2014 April 02, 2014 Disclosures pertaining to Assets Under
Management
188. CI R/IMD/DF/05/2014 March 24, 2014 Enhancing disclosures, investor education &
awareness campaign, developing alternative
distribution channels for Mutual Fund
products, etc.
189. CI R/IMD/DF/20/2013 November 29, 2013 Circular on Infrastructure Debt Fund (IDF)
190. CI R/IMD/DF/16/2013 October 18, 2013 Gold Exchange Traded Fund scheme (Gold
ETFs) and Gold Deposit Scheme (GDS) of
Banks
191. CI R / IMD / DF / 7 / 2013 April 23, 2013 Circular on Infrastructure Debt Fund
192. CI R/IMD/DF/5/2013 March 18, 2013 Product Labelling in Mutual Funds
193. CI R/IMD/DF/04/2013 February 15, 2013 Gold Exchange Traded Fund scheme (Gold
ETFs)
Investment in Gold Deposit Scheme (GDS) of
Banks
194. CI R/ IMD/ DF/02/2013 February 06, 2013 Time period of initial offering and allotment of
units of Mutual Fund scheme eligible under
Rajiv Gandhi Equity Savings Scheme, 2012
(RGESS)
195. CI R/IMD/DF/24/2012 November 19, 2012 Circular on Mutual Funds
196. CI R/IMD/DF/23/2012 November 15, 2012 Participation of mutual funds in Credit Default
Swaps (CDS) Market as users ("Protection
Buyers") and in repo, in corporate debt
securities
197. CI R/IMD/DF/21/2012 September 13, 2012 Steps to re-energize Mutual Fund Industry
198. Ci r/IMD/DF/6/2012 February 28, 2012 Circular on Mutual Funds
199. Ci r/IMD/DF/7/2012 February 28, 2012 Circular for Mutual Funds
200. CI R / IMD / DF / 21 / 2011 December 13, 2011 Revised Format of Monthly Cumulative Report
(MCR) incorporating investments in
Infrastructure Debt fund
201. CI R / IMD / DF / 19 / 2011 November 11, 2011 Participation of mutual funds in repo in
corporate debt securities
202. Ci r/ IMD/ DF/ 16 / 2011 September 08, 2011 Amendment to SEBI (Mutual Funds)
Regulations, 1996
203. Ci r/ IMD/ DF/13/ 2011 August 22, 2011 Circular for Mutual Funds
204. CI R/IMD/DF/12/2011 August 01, 2011 Indicative Portfolios and Yield in close ended
debt oriented mutual funds Schemes
205. CI R/IMD/DF/9/2011 May 19, 2011 Option to hold units in Demat Form
206. CI R/MFD/DF/4/2011 March 09, 2011 Usage of Load Balance
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207. Ci r/ IMD/ DF/20/2010 December 06, 2010 Half Yearly Report by Trustees
208. Ci r / IMD / DF / 19 / 2010 November 26, 2010 Circular for Mutual Funds
209. CI R/IMD/DF/17/2010 November 09, 2010 Facilitating transactions in Mutual Fund
schemes through the Stock Exchange
infrastructure
210. Ci r / IMD / DF / 15/ 2010 October 22, 2010 Consolidation or merger of Schemes
211. CI R/IMD/DF/10/2010 August 18, 2010 Transferability of Mutual Fund units
212. Ci r/ IMD/ DF/ 11/ 2010 August 18, 2010 Review of norms for investment and
disclosure by Mutual Funds in derivatives
213. Ci r / IMD / DF / 9 / 2010 August 12, 2010 Updation of investor related documents
214. Ci r / IMD / DF / 8 / 2010 August 06, 2010 Amendments to SEBI (Mutual Funds)
Regulations, 1996
215. Ci r / IMD / DF / 6 / 2010 July 28, 2010 Additional Mode of payment through
Application Supported by Blocked Amount
(hereinafter referred to as 'ASBA') in Mutual
Funds
216. Ci r / IMD / DF / 5 / 2010 June 24, 2010 Certificate Programme for sale and/or
distributors of mutual fund products
217. Ci r / IMD / DF / 4 / 2010 June 21, 2010 Valuation of Debt and Money Market
Instruments
218. Ci r / IMD / DF/ 2 / 2010 May 13, 2010 Disclosure of investor complaints with respect
to Mutual Funds
219. SE BI/IMD/CIR No. 18/ March 15, 2010 Circular for Mutual Funds
198647/2010
220. SE BI/IMD/CIR No. 17/ February 04, 2010 Standard warning in Advertisements by Mutual
193751/2010 Funds
221. SE BI/IMD/CIR No.16/ February 02, 2010 Valuation of Debt and Money Market
193388/2010 Instruments
222. SE BI/IMD/CIR January 18, 2010 Advertisement by mutual funds
No.15/191378 /2010
223. SE BI/IMD/CIR No December 15, 2009 Modification to existing SEBI circulars on
14/187175/2009 Mutual Funds
224. SE BI/IMD/CIR No.12 December 11, 2009 Transaction through some MF distributors and
/186868 /2009 compliance with SEBI circular on AML
225. SE BI/IMD/CIR No./ December 11, 2009 AMFI Guidelines for change of mutual fund
13/187052 /2009 distributor
226. SE BI /IMD / CIR November 13, 2009 Facilitating transactions in Mutual Fund
No.11/183204/ 2009 schemes through the Stock Exchange
infrastructure
227. SE BI/IMD/CIR No. September 29, 2009 Statement of Additional Information (SAI) and
10/178129/09 Scheme Information Document (SID) to be
made available on SEBI website
228. SE BI/IMD/CIR No. September 16, 2009 System Audit of Mutual Funds
8/176988/2009
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229. SE BI/IMD/CIR No. August 27, 2009 Code of Conduct for Intermediaries of Mutual
8/174648/2009 Funds
230. SE BI/IMD/CIR August 17, 2009 Exit load - Parity among all classes of unit
No.7/173650/2009 holders
231. SE BI / IMD / CIR No. 6 August 07, 2009 Exit load - Parity among all classes of unit
/172445/ 2009 holders
232. SE BI/IMD/CIR No. July 08, 2009 Revision in filing fees - Amendments to SEBI
5/169030/2009 (Mutual Funds) Regulations, 1996
233. SE BI/IMD/CIR No. 4/ June 30, 2009 Mutual Funds - Empowering Investors through
168230/09 transparency in payment of commission and
load structure
234. SE BI/IMD/CIR June 15, 2009 Guidelines for Investment by Mutual Funds in
No.3/166386/2009 Money Market Instruments
235. SE BI/IMD/CIR No. June 12, 2009 Valuation of debt securities by Mutual Funds
2/166256/2009
236. SE BI/IMD/CIR No. 1/165935 June 09, 2009 Guidelines for investment by Mutual Funds in
/ 2009 Indian Depository Receipts (IDRs) and copies
of gazette notifications dated April 08, 2009
and June 05, 2009
237. SE BI/IMD/CIR No. March 19, 2009 Portfolio Format for debt oriented close-ended
15/157701/09 and interval schemes/plans
238. SE BI/IMD/CIR No. January 19, 2009 Portfolio of “Liquid Schemes” and
13/150975/09 nomenclature of “Liquid Plus” schemes
239. SE BI/IMD/CIR No. January 19, 2009 Indicative Portfolios and Yields in Mutual
14/151044/09 Funds Scheme
240. SE BI/IMD/CIR No. December 11, 2008 Review of Provisions relating to Close Ended
12/147132/08 Schemes
241. SE BI/IMD/CIR No. October 24, 2008 Applicability of Net Asset Value (NAV) for
11/142521/08 Income/Debt oriented Mutual Fund
scheme(s)/plan(s) (Other than liquid fund
schemes)
242. SE BI/IMD/CIR No. 10 October 20, 2008 Standardizing format of Abridged Scheme
/141712/08 wise Annual Report Format and Reduction in
time period for dispatch to the unitholders -
Amendments to SEBI (Mutual Funds)
Regulations, 1996
243. SE BI/IMD/CIR No. October 18, 2008 Valuation of Debt securities by Mutual Funds
9/141601/08
244. SE BI/IMD/CIR July 24, 2008 Abridged Scheme wise Annual Report and
No.8/132968/08 period disclosures to Unit holders
245. SE BI/IMD/CIR June 23, 2008 Parking of Funds in Short Term Deposits of
No.7/129592/08 Scheduled Commercial Banks by Mutual
Funds - Pending deployment
246. SE BI/IMD/CIR June 06, 2008 Short Selling and Securities Lending and
No.6/127947/08 Borrowing & Net Settlement of Government
Securities Transactions - Amendments to
SEBI (Mutual Funds) Regulations, 1996
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247. SE BI/IMD/CIR No. May 23, 2008 Simplification of Offer Document and Key
5/126096/08 Information Memorandum of Mutual Funds
schemes
248. SE BI/IMD/CIR May 02, 2008 Notification on Real Estate Mutual Fund
No.4/124477/08 schemes and initial issue expenses
249. SE BI/IMD/CIR No. April 30, 2008 Revised Monthly Cumulative Report (MCR)
3/124444/08
250. SE BI/IMD/CIR April 08, 2008 Overseas Investments by Mutual Fund
No.2/122577/08
251. SE BI/IMD/CIR April 03, 2008 Revision in Filing Fees and Registration Fees
No.1/122201/08 - Amendment to SEBI (Mutual Funds)
Regulations, 1996
252. SE BI/IMD/CIR No. March 18, 2008 Load on Bonus Units and units allotted on
14/120784/08 Reinvestment of Dividend
253. SE BI/IMD/CIR No. February 29, 2008 New Scheme Report
13/118899/08
254. SE BI/IMD/CIR No. 12/ February 26, 2008 Standard warning in Advertisements by Mutual
118340 /08 Funds
255. SE BI/IMD/CIR No. 11/ January 31, 2008 Removal of Initial Issue Expenses
115723 /08
256. SE BI/IMD/CIR No. 10/ December 31, 2007 Waiver of Entry Load for Direct applications
112153 /07
257. SE BI/IMD/CIR November 16, 2007 Circular for Mutual Funds
No.9/108562/07
258. SE BI/IMD/CIR October 26, 2007 Parking of Funds in Short Term Deposits of
No.8/107311/07 Scheduled Commercial Banks by Mutual
Funds - Pending deployment
259. SE BI/IMD/CIR September 26, 2007 Overseas Investments by Mutual Fund
No.7/104753/07
260. SE BI/IMD/CIR No. July 05, 2007 Bi-monthly Compliance Test Reports (CTRs)
6/98057/07
261. SE BI/IMD/CIR No.5 June 25, 2007 Extension of time for uploading of NAVs of
/96576/07 Fund of Fund schemes
262. SE BI/IMD/CIR No.4 June 11, 2007 Gazette notification dated May 28, 2007
/95754/07
263. SE BI/IMD/CIR May 14, 2007 Investment in ADRs/GDRs/Foreign Securities
No.3/93334/07 and overseas ETFs by Mutual Funds
264. SE BI/IMD/CIR April 20, 2007 REVISED MONTHLY CUMULATIVE
No.2/91600/07 REPORT (MCR)
265. SE BI/IMD/CIR April 17, 2007 REVISED MONTHLY CUMULATIVE
No.2/91033/07 REPORT (MCR)
266. SE BI/IMD/CIR No. 1/ 91171 April 16, 2007 Parking of Funds in Short Term Deposits of
/07 Scheduled Commercial Banks by Mutual
Funds - Pending deployment
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267. SE BI/IMD/CIR No. February 22, 2007 Additional Reporting with Monthly Cumulative
15/87045/2007 Report (MCR)
268. SE BI/IMD/CIR No.14 January 15, 2007 Circular for Mutual Funds
/84243/07
269. SE BI/IMD/CIR January 04, 2007 Investments in ADRs/GDRs/Foreign Securities
No.13/83589/07 and Overseas EFT by Mutual Funds
270. IM D/CIR/12/80083/2006 November 20, 2006 Dispatch of Account Statement
271. SE BI/IMD/CIR October 11, 2006 Uniform Cut Off Time for applicability of Net
No.11/78450/06 Asset Value (NAV) of Mutual Fund
scheme(s)/Plan(s)
272. SE BI/IMD/CIR No.10 / September 28, 2006 Uniform Cut Off Time for applicability of Net
77780/06 Asset Value (NAV) of Mutual Fund
scheme(s)/Plan(s)
273. SE BI/IMD/CIR August 14, 2006 Gazette notification dated August 03, 2006
No.9/74364/06
274. SE BI/IMD/CIR No.8 / August 04, 2006 Filing of Annual Information Return to be filed
73580/06 by Mutual Funds
275. SE BI/IMD/CIR No. 7 / 73202 August 02, 2006 Investments in ADRs/GDRs/Foreign Securities
/06 and Overseas EFTs by Mutual Funds
276. SE BI/IMD/CIR No. 6 / 72245 July 20, 2006 Revised Monthly Cumulative (MCR) and
/06 Annual Statistical Report (ASR)
277. SE BI/IMD/CIR June 30, 2006 Undertaking from Trustee for New Scheme
No.5/70559/06 Offer Document
278. SE BI/IMD/CIR June 16, 2006 Gazette notification dated May 22, 2006
No.4/69458/06
279. SE BI/IMD/CIR No. April 21, 2006 Introduction of Gold Exchange Traded Funds
2/65348/06 in India.
280. SE BI/IMD/CIR No. April 21, 2006 Dividend Distribution Procedure for Mutual
3/65370/06 Funds
281. SE BI/IMD/CIR No. April 04, 2006 Rationalization of Initial issue expenses and
1/64057/06 dividend distribution procedure for Mutual
Funds
282. SE BI/IMD/CIR No. March 29, 2006 Review of time limit for updating NAV on AMFI
5/63714/06 website
283. SE BI/IMD/CIR No. March 29, 2006 Applicability of Investment restrictions for
5/63715/06 securitized debt
284. SE BI/IMD/CIR January 24, 2006 Gold ETF
No.4/58422/06
285. SE BI/IMD/CIR September 26, 2005 Investments in ADRs/GDRs/Foreign Securities
No.3/50241/05 by Mutual Funds
286. SE BI/ IMD/CIR August 10, 2005 Unique Client Code (UCC) for Mutual Fund
No.2/46603/2005 schemes/plans
287. SE BI/ IMD/CIR No.1 June 14, 2005 Minimum number of investors in the
/42529/2005 Scheme(s)/Plan(s) of Mutual Funds
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288. SE BI/ IMD/CIR March 16, 2005 Compliance Test Report (CTR)
No.11/36222/2005
289. SE BI/IMD/CIR No. 10/ July 28, 2004 Key Information Memorandum
16521/04
290. SE BI/IMD/CIR No. 9/ March 25, 2004 Uniform Cut Off Time for applicability of Net
6016/04 Asset Value (NAV) of Mutual Fund
Scheme(s)/plan(s)
291. SE BI/IMD/CIR No. 7/ March 19, 2004 Investment in Foreign Securities by Mutual
5573/04 Funds
292. SE BI/IMD/CIR No. 8/ March 19, 2004 Uniform Cut Off Time for applicability of Net
5611/04 Asset Value (NAV) of Mutual Fund
Scheme(s)/plan(s)
293. SE BI/IMD/CIR No. 6/ March 01, 2004 Mentioning Bank Account Numbers & PAN by
4213/04 investors
294. SE BI/ IMD/CIR No. 5/265/ February 16, 2004 Gazette notification dated January 15, 2004
2004
295. SE BI/ IMD/CIR No. 4/2627/ February 06, 2004 Guidelines for Participation by Mutual Fund in
2004 Derivative Trading
296. SE BI/IMD/CIR No. February 05, 2004 REVISED MONTHLY CUMULATIVE
03/2564/04 REPORT (MCR)
297. SE BI/IMD/CIR No. February 04, 2004 Certification of Agents/distributors and
02/254/04 employees
298. SE BI/IMD/CIR No. January 27, 2004 Unique Client Code for Schemes/Plans of
01/1756/04 Mutual Funds
299. SE BI/IMD/CIR No. December 12, 2003 Minimum number of investors in the
10/22701/03 Schemes/Plans of Mutual Funds
300. SE BI/IMD/CIR No. November 12, 2003 Investment by Mutual Funds in Short Term
9/20306/03 Deposits of Scheduled Commercial Banks
301. SE BI/IMD/CIR October 06, 2003 Investment Limits for Government Guaranteed
No.8/18944/03 Debt Securities
302. SE BI/MFD/CIR July 11, 2003 Investment/trading in securities by employees
No.7/13391/03 of Asset Management Companies and Mutual
Fund Trustee Companies
303. SE BI/MFD/CIR June 26, 2003 Advertisement by Mutual Funds
No.6/12357/03
304. SE BI/MFD/CIR June 23, 2003 Consolidation of Schemes
No.5/12031/03
305. M FD/CIR No.04/11488/2003 June 12, 2003 Role of Chief Executive Officers and Fund
Managers & Fund of Funds
306. SE BI/MFD/CIR No.3/158/03 June 10, 2003 Investment in Interest Rate Derivatives
307. SE BI/MFD/CIR April 04, 2003 Guidelines for Investment in Foreign
No.2/6855/03 Securities by Mutual Funds
308. SE BI/MFD/CIR April 03, 2003 Certification and Registration of Intermediaries
No.1/6693/03
309. M FD/CIR No.23/066/2003 March 07, 2003 Investment Valuation Norms for Mutual Funds
Page 331 of 748
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310. M FD/CIR No.22/2311/03 January 30, 2003 Conversion of Close ended Schemes to open-
ended schemes
311. M FD/CIR/21/25467/2002 December 31, 2002 Guidelines for participation by Mutual Funds in
Trading in Derivative Products
312. M FD/CIR/20/23230/2002 November 28, 2002 Registration of Intermediaries
313. M FD/CIR/19/22474/2002 November 20, 2002 Reconciliation Procedure for investment in
Government Securities
314. M FD/CIR/18/21826/2002 November 07, 2002 Investment in Foreign Securities
315. M FD/CIR/16/21105/2002 October 28, 2002 Appointment of Independent Directors
316. M FD/CIR/16/20844/2002 October 24, 2002 Gazette notification dated September 09, 2002
317. M FD/CIR/15/19133/2002 September 30, 2002 Risk Management System
318. M FD/CIR/14/18337/2002 September 19, 2002 Portfolio Disclosures
319. M FD/CIR/13/16799/2002 August 29, 2002 Independent Directors on Boards of AMCs
and Trustee Companies
320. M FD/CIR/12/16588/2002 August 28, 2002 Quarterly reports on movement in net assets &
New Scheme report
321. M FD/CIR/10/16159/2002 August 22, 2002 Rounding off of NAVs
322. M FD/CIR/10/15895/2002 August 20, 2002 Circular for Mutual Funds
323. M FD/CIR/09/247/2002 July 23, 2002 New Scheme Report
324. M FD/CIR/08/514/2002 July 22, 2002 Uniformity in calculation of Sale and
Repurchase Price & Rounding off NAVs
325. M FD/CIR/ 07/213/2002 July 02, 2002 Circular for Mutual Funds
326. M FD/CIR/ 06/210/2002 June 26, 2002 Code of Conduct for intermediaries of Mutual
Fund
327. M FD/CIR/05/432/2002 June 20, 2002 Circular for Mutual Funds
328. M FD/CIR/04/430/2002 June 19, 2002 Circular for Mutual Funds
329. M FD/CIR/03/526/2002 May 09, 2002 Investment in Unlisted Equity shares
330. M FD/CIR/02/110/02 April 26, 2002 Revised Annual Statistical Report (ASR)
331. M FD/CIR/01/071/02 April 15, 2002 Benchmarks for Debt-Oriented and Balanced
Funds schemes
332. M FD/CIR/17/419/02 March 30, 2002 Guidelines for Investment in Foreign
Securities by Mutual Funds
333. M FD/CIR/16/400/02 March 26, 2002 Introduction of Benchmarks
334. M FD/CIR/15/041/2002 March 14, 2002 Publication of audited annual accounts by
mutual funds
335. M FD/CIR/ No.14/442/2002 February 20, 2002 Circular for Mutual Funds
336. M FD/CIR No.13/370/02 January 16, 2002 SEBI Investors Education Programme-
Investments in Mutual Funds
337. M FD/CIR No.12/362/02 January 03, 2002 Rendering investment advice and reporting of
compliance officer to SEBI
Page 332 of 748
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338. M FD/CIR/11/354/2001 December 20, 2001 Independent Directors on Boards of AMCs
and Trustee Companies.
339. M FD/CIR No.10/310/01 September 25, 2001 Certification Programme and Disclosure
Standards.
340. M FD/CIR/9/230/2001 August 14, 2001 Circular for Mutual Funds
341. M FD/CIR/No.8/290/01 July 30, 2001 Clients Codes For Mutual Funds
342. M FD/CIR/07/206/2001 July 19, 2001 Discontinuing Monthly Statistical Reports
(MSTATS)
343. M FD/CIR/06/275/2001 July 09, 2001 Circular for Mutual Funds
344. M FD/CIR No.5/153/2001 May 24, 2001 Circular for Mutual Funds
345. M FD/CIR No.4/216/2001 May 08, 2001 Investment/trading in securities by employees
of Asset Management Companies and Mutual
Fund Trustee Companies
346. M FD/CIR/ No.3/211/2001 April 30, 2001 Circular for Mutual Funds
347. M FD/CIR No.2/205/01 April 27, 2001 Validity of Scheme Offer Documents.
348. M FD/CIR/1/200/2001 April 20, 2001 Format for Half-Yearly of Unaudited Financial
Results
349. M FD/CIR/13/087/2001 March 28, 2001 Gazette Notification and publication of NAV of
close ended scheme
350. M FD/CIR/14/088/2001 March 28, 2001 Guidelines for Valuation of securities
351. M FD/CIR No. 12/175/01 February 15, 2001 Launch of Additional Plans under existing
schemes
352. M FD/CIR/10/039/2001 February 09, 2001 Circular for Mutual Funds
353. M FD/CIR No.11/171/01 February 09, 2001 Disclosure of NAVs on AMFI website
354. M FD/CIR/9/120/2000 November 24, 2000 Circular for Mutual Funds
355. M FD/CIR/8(a)/104/2000 October 03, 2000 Guidelines for Mutual Funds
356. M FD/CIR/8/92/2000 September 18, 2000 Guidelines for valuation of securities for
Mutual Funds
357. M F/CIR/07/404/2000 July 31, 2000 Monthly Cumulative Report (MCR)
358. M FD/CIR/6/73/2000 July 27, 2000 Recording of investment decisions by Mutual
Funds
359. M FD/CIR/5/360/2000 July 04, 2000 Revised Format of Compliance Test Reports
(CTRs)
360. M FD/CIR/4/51/2000 June 05, 2000 Guidelines for Advertisement by Mutual Funds
361. M FD/CIR/3/292/2000 May 30, 2000 Gazette Notification dated May 22,2000
362. SE BI/MFD /CIR/2/266/2000 May 19, 2000 Payment of interest for delay in dispatch of
redemption or repurchase proceeds.
363. M FD/CIR/1/189/2000 April 10, 2000 Gazette Notification dated March 14, 2020 and
Money Market Mutual Funds Schemes
364. M F/CIR/12/109/2000 February 22, 2000 Submission of soft copies of offer document
365. M FD/CIR/011/061/2000 February 01, 2000 Guidelines for participation by Mutual Funds in
Trading in Derivative
Page 333 of 748
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366. M FD/CIR NO.010/024/2000 January 17, 2000 Frequency of Portfolio Disclosure, Formation
of Audit Committee & Formation of Valuation
committee by AMC
367. M FD/CIR/09/014/2000 January 05, 2000 Applicability of Investment Restrictions,
Responsibilities of Trustees etc.
368. M FD/CIR/08/23026/99 December 23, 1999 Clarification on Reporting of Transactions by
Mutual Funds
369. M FD/CIR/07/384/99 December 17, 1999 Reporting of Transactions by Mutual Funds.
370. M FD/CIR NO.5/062/99 September 30, 1999 Investments in ADRs/GDRs by Mutual Funds
371. M FD/CIR NO.4/052/99 September 01, 1999 Investments in ADRs/GDRs by Mutual Funds
372. M FD/CIR/01/047/99 February 10, 1999 Guidelines for Participation in Stock Lending
Scheme
373. IIM ARP/MF/CIR/07/826/98 April 15, 1998 SEBI Circular dated April 15, 1998
374. IIM ARP/MF/CIR/06/793/98 March 31, 1998 Standard Offer Document and Key Information
Memorandum
375. IIM ARP/MF/CIR/04/571/98 March 04, 1998 Corrigendum dated February 06, 1998 to
Gazette notification dated January 12, 1998
376. IIM ARP/MF/CIR/01/294/98 February 04, 1998 Gazette Notification dated January 12, 1998
and Clarifications
377. IIM ARP/MF/CIR/14/1570/97 August 18, 1997 Compliance Test Formats
378. IIM ARP/MF/CIR/11/1171/97 June 20, 1997 Amendment in SEBI (Mutual Funds)
Regulations, 1996
379. IIM ARP/MF/CIR/10/1076/97 June 05, 1997 Submission of Compliance Test Formats
380. IIM ARP/CIR/08/845/97 May 07, 1997 Submission of Statistical Information/Bio-data
of Key-Personnel
381. IIM ARP/MF/CIR/07/844/97 May 05, 1997 Filing of Offer Documents/Disclosure of NAV
And Guaranteed Return Scheme
382. IIM ARP/ MF/CIR/05/788/97 April 28, 1997 Formats of Statistical Information/Compliance
Reports/Bio-Data of key personnel of AMCs
383. IIM ARP/MF/CIR/01/428/97 February 28, 1997 Limitations of Fees and expenses charged to
schemes and filing Of offer document of
schemes
384. SM D-II(N)/2113/94 April 12, 1994 No 1% listing deposit from Mutual Funds
385. IIM ARP/10772/93 July 14, 1993 Reporting by Mutual Funds - New Scheme
Reports
386. SE BI/HO/IMD/DF2/CIR/P/20 August 24, 2020 Master Circular for Mutual Funds
20/156
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ANNEXURES
INDEX OF ANNEXURES
INDEX OF ANNEXURES.......................................................................................................................... 336
ANNEXURE 1: CATEGORIZATION OF MUTUAL FUND SCHEMES ................................................. 337
ANNEXURE 1A – METHODOLOGY FOR PORTFOLIO OVERLAPPING .............................................................. 337
ANNEXURE 1B – LIFE CYCLE FUNDS ............................................................................................................ 338
ANNEXURE 1C – STANDARDIZED FRAMEWORK FOR FUND OF FUND (FOF) SCHEMES ............................... 341
ANNEXURE 1C(I) – NAME OF REGIONS ......................................................................................................... 345
ANNEXURE 1C(II) – BENCHMARK FOR FOFS ................................................................................................ 346
ANNEXURE 1C(III) – NOMENCLATURE FOR FOFS ........................................................................................ 348
ANNEXURE 1C(IV) – NUMBER OF FOFS PERMITTED TO BE LAUNCHED BY AN AMC ................................... 350
ANNEXURE 2: GUIDELINES REGARDING THE MARKET MAKING FRAMEWORK ..................... 352
ANNEXURE 3: DETAILS OF ESG STRATEGIES ................................................................................. 353
ANNEXURE 4: RISK MANAGEMENT FRAMEWORK (RMF) FOR MUTUAL FUNDS ..................... 354
ANNEXURE 5: REPORTING FOR ARTIFICIAL INTELLIGENCE (AI) AND MACHINE LEARNING
(ML) APPLICATIONS AND SYSTEMS OFFERED AND USED BY MUTUAL FUNDS ..................... 387
ANNEXURE 6: UNIT HOLDER PROTECTION COMMITTEE (UHPC) ................................................ 388
ANNEXURE 7: SYSTEM AUDIT ............................................................................................................. 391
ANNEXURE 7A - SYSTEM AUDIT FRAMEWORK FOR MFS/AMCS .................................................................. 391
ANNEXURE 7B - SYSTEM AUDIT PROGRAM CHECKLIST ............................................................................... 394
ANNEXURE 8: STEWARDSHIP CODE FOR ALL MUTUAL FUNDS IN RELATION TO THEIR
INVESTMENT IN LISTED EQUITIES ...................................................................................................... 418
ANNEXURE 9: FREQUENTLY ASKED QUESTIONS (FAQS) ............................................................ 422
ANNEXURE 10: PRODUCT LABELLING IN MUTUAL FUND SCHEMES – RISK-O-METER ......... 423
ANNEXURE 11: CORPORATE DEBT MARKET DEVELOPMENT FUND (CDMDF) ........................ 446
ANNEXURE 11A - APPROACH TO PURCHASE PRICING ................................................................................. 446
ANNEXURE 11B - LOSS WATERFALL ACCOUNTING FOR CDMDF ............................................................... 448
ANNEXURE 12: EXECUTION ONLY PLATFORMS ............................................................................. 458
ANNEXURE 12A – MINIMUM DISCLOSURE REQUIREMENTS ......................................................................... 458
ANNEXURE 12B – RECORDS TO BE MAINTAINED BY CATEGORY 2 EOP ..................................................... 459
ANNEXURE 13: SPECIALIZED INVESTMENT FUNDS (SIF) ............................................................. 460
ANNEXURE 13A - ILLUSTRATION ON DERIVATIVE EXPOSURE ...................................................................... 460
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ANNEXURE 1: CATEGORIZATION OF MUTUAL FUND SCHEMES468
Annexure 1A – Methodology for Portfolio Overlapping
1. Weightage of each scrip in a scheme shall be calculated as: Investment made in a particular
scrip (ISIN) wise as percentage of AUM of the scheme.
2. Portfolio overlap shall be computed at the level of individual ISINs. Only common scrips held
by both schemes shall be considered for overlap calculation, scrips not common to both
schemes shall be assigned a weightage of zero.
3. For each common scrip, the minimum weightage between the two schemes shall be
considered.
4. The overall portfolio overlap between the two schemes shall be the sum of such minimum
weightages of all common scrips as indicated in the illustrative table below:
Scrips Weightage of Scrip in Scheme A Weightage of Scrip in Scheme B Overlap
Scrip P 10% 25% 10%
Scrip Q 15% 30% 15%
Scrip R 20% 10% 10%
Scrip S 10% - 0
Scrip X - 25% 0
Scrip Y 25% 10% 10%
Scrip Z 20% - 0
Total 100% 100% 45%
5. Accordingly, portfolio overlap shall be calculated using the following formula:
Portfolio Overlap (%) =∑𝑛 min(𝑤 ,𝑤 ) 𝑋 100
𝑖=1 𝑖𝐴 𝑖𝐵
w - represents the weightage of the ith common security (ISIN) in Scheme A
iA
w - represents the weightage of the ith common security (ISIN) in Scheme B
iB
w - Market value of security i
i
Total AUM of the scheme
468 SEBI Circular No. HO/24/13/15(2)2026-IMD-RAC4/I/5764/2026 dated February 26, 2026
Page 337 of 748
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Annexure 1B – Life Cycle Funds
An open ended fund with a target date maturity following a glide path investing in a mix of asset
classes i.e. Equity, Debt, InvITs, ETCDs, Gold & Silver ETF.
1. Mutual Fund may launch Life Cycle Funds with a minimum tenure of 5 years and a maximum
tenure of 30 years. Such fund may be launched for tenures in multiple of 5 years and a
maximum of 6 funds by a Mutual Fund can be active for subscription at any given point in
time. Additionally, as each fund reaches less than 1 year to maturity, such fund may be
merged with nearest maturity Life Cycle Fund with positive consent from the unitholders.
2. Asset Allocation for Life Cycle Funds to be followed in following manner:
For Life Cycle Funds with maturity of 30 years
Years to Investment in Equity Investment in Debt (%) Investment in Gold/Silver
Maturity (%) ETFs/ETCDs/InvITs (%)
15-30 Years 65-95 5-25 0-10
10-15 Years 65-80 5-25 0-10
5-10 Years 50-65 5-25 0-10
3-5 Years 35-50 25-50 0-10
1-3 Years 20-35 25-65** 0-10
< 1 Years 5-20 25-65** 0-10
For Life Cycle Funds with maturity of 25 years
Years to Investment in Equity Investment in Debt (%) Investment in Gold/Silver
Maturity (%) ETFs/ ETCDs /InvITs (%)
15-25 Years 65-95 5-25 0-10
10-15 Years 65-80 5-25 0-10
5-10 Years 50-65 5-25 0-10
3-5 Years 35-50 25-50 0-10
1-3 Years 20-35 25-65** 0-10
< 1 Years 5-20 25-65** 0-10
For Life Cycle Funds with maturity of 20 years
Years to Investment in Equity Investment in Debt (%) Investment in Gold/Silver
Maturity (%) ETFs/ ETCDs /InvITs (%)
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15-20 Years 65-95 5-25 0-10
10-15 Years 65-80 5-25 0-10
5-10 Years 50-65 5-25 0-10
3-5 Years 35-50 25-50 0-10
1-3 Years 20-35 25-65** 0-10
< 1 Years 5-20 25-65** 0-10
For Life Cycle Funds with maturity of 15 years
Years to Investment in Equity Investment in Debt (%) Investment in Gold/Silver
Maturity (%) ETFs/ ETCDs /InvITs (%)
10-15 Years 65-80 5-25 0-10
5-10 Years 50-65 5-25 0-10
3-5 Years 35-50 25-50 0-10
1-3 Years 20-35 25-65** 0-10
< 1 Years 5-20 25-65** 0-10
For Life Cycle Funds with maturity of 10 years
Years to Investment in Equity (%) Investment in Debt (%) Investment in Gold/Silver
Maturity ETFs/ ETCDs /InvITs (%)
5-10 Years 50-65 5-25 0-10
3-5 Years 35-50 25-50 0-10
1-3 Years 20-35 25-65** 0-10
< 1 Years 5-20 25-65** 0-10
For Life Cycle Funds with maturity of 5 years
Years to Investment in Equity (%) Investment in Debt (%) Investment in Gold/Silver
Maturity ETFs/ ETCDs /InvITs (%)
3-5 Years 35-50 25-50 0-10
1-3 Years 20-35 25-65** 0-10
< 1 Years 5-20 25-65** 0-10
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** Exposure in debt instruments shall be limited to AA & above rated instruments with
residual maturity less than the target maturity of scheme.
ETCDs shall be based only on Gold/Silver.
For years to maturity less than 10 years, all Life Cycle Funds may take equity arbitrage
exposure upto 50% in addition to the investment range specified for equity while ensuring
that total investment in equity and equity related instruments remains within 65%- 75% in
such schemes (as defined above).
3. In order to inculcate financial discipline, in life cycle funds, an exit load of 3% would be
chargeable on any exit by an investor within one year of investment; an exit load of 2%
within first two years of investment and 1% in the first three years of investment.
4. Life Cycle Funds shall follow benchmark framework as prescribed for Multi Asset Allocation
Fund.
5. Life Cycle Funds shall include the maturity date in the nomenclature of the scheme, for e.g.
Life Cycle Fund 2055, Life Cycle Fund 2045 etc.
a. An AMC may opt to continue ‘Children’s Fund’, however such AMC may not
launch 20 years life cycle fund and may launch either/all of remaining 5 life cycle
funds.
b. An AMC may opt to continue ‘Retirement Fund’, however such AMC may not
launch 30 years life cycle fund and may launch either/all of remaining 5 life cycle
funds.
c. An AMC may opt to continue both ‘Children’s Fund’ and ‘Retirement Fund’,
however such AMC may not launch 20 years and 30-year life cycle fund and
launch either/all of remaining 4 life cycle funds only i.e. 5 year, 10 year, 15 year
and 25 year.
d. An AMC may discontinue ‘Children’s Fund’ and ‘Retirement Fund’ and opt to
launch 6 life cycle funds. All subscriptions in the aforesaid schemes shall be
stopped and such schemes shall be merged with any other scheme as per the
approval of the Board.
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Annexure 1C – Standardized Framework for Fund of Fund (FoF) Schemes
Applicability- The captioned framework is applicable for all Fund of Fund Schemes having
more than one underlying funds.
CATEGORISATION OF FUND OF FUND SCHEMES (with multiple underlying Funds)
AMCs may launch FOFs with multiple underlying funds under the following broad categories:
S.no. Category of Sub-Category Description
FOF
1. Equity oriented Diversified FOF FOFs that invests in schemes which are
FOF (Domestic) based on varied market caps e.g. large-cap,
mid-cap, Nifty 100, Nifty 50 etc are allowed
under this sub-category and these
underlying schemes should not be based on
factors like momentum, volatility, etc.
Sectoral FoF based on
/Thematic FOF
 a single sector; or
 a single theme; or
 Multi-sector.
2. Debt oriented These FoFs shall invest in domestic debt
FOF (Domestic) oriented MF schemes based on
 different categories of debt schemes as
per Paragraph 3.8 of this Master
Circular.
 a single category of debt schemes as per
Paragraph 3.8 of this Master Circular on
Mutual Fund.
3. Hybrid Aggressive Investment in underlying Equity oriented
FoF(Domestic) Hybrid FoF schemes- 65% to 80%;
Investment in underlying Debt oriented
schemes - 20% to 35%.
Conservative Investment in underlying Equity oriented
Hybrid FoF schemes- 10% to 25%;
Investment in underlying Debt oriented
schemes - 75% to 90%.
Income plus Investment in underlying Debt oriented
Arbitrage FOF schemes – up to 65%.
Balance investment in only arbitrage based
underlying schemes.
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Dynamic Asset Investment in equity / debt oriented
Allocation FoF schemes that are managed dynamically
Multi Asset Investment in Equity oriented schemes,
Allocation FoF Debt oriented schemes + Commodity based
schemes* (and any other asset class based
scheme as permissible by SEBI from time to
time), subject to minimum investment of
10% in each of the three categories of
schemes.
*currently only gold and silver based passive
schemes are allowed to be launched under
commodity based schemes.
4. Commodity Investment in commodity funds which invest
based in Gold and/or Silver or any other commodity
FoF(Domestic) that may be permitted by SEBI from time to
time.
Equity oriented FOF (Overseas)
Country specific FOFs investing in overseas equity oriented
Equity FoF schemes that provides exposure to the
equity markets of a particular country
Thematic/Sector FOFs investing in overseas equity oriented
based Equity schemes that are based on a single
FoF theme/sector
Region specific FOFs investing in overseas equity oriented
5. Overseas FoF1 Equity FoF2 schemes that provides exposure to the
equity markets of a particular region
Debt oriented FOF (Overseas)
Country specific FOFs investing in overseas debt oriented
Debt FoF schemes that provides exposure to the debt
markets of a particular country
Region specific FOFs investing in overseas debt oriented
Debt FoF2 schemes that provides exposure to the debt
markets of a particular region
6. Domestic and Diversified FOFs investing in domestic and overseas
Overseas FOF1 Equity FOF equity oriented schemes which should not
be based on the factors like momentum,
quality, etc.
Minimum investment in underlying domestic
and overseas schemes should be at least
35% each.
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Sectoral FoF investing in domestic and overseas
/Thematic based equity schemes based on
Equity FOF
 a single sector; or
 a single theme; or
 Multi-sector.
Minimum investment in underlying domestic
and overseas schemes should be at least
35% each.
Debt oriented FOFs investing in domestic and overseas
FOF debt oriented schemes.
Minimum investment in underlying domestic
and overseas schemes should be at least
35% each.
Note:
1. W.r.t Overseas FoFs, the AMC to take into account certain parameters such as liquidity
in such overseas funds, a certain threshold of collective AUM following the overseas
indices of such overseas funds, compliance of such indices with portfolio concentration
norms for passive indices etc.
2. List of regions for launch of Region specific FOFs is placed at Annexure 1C(i). Further,
AMFI in consultation with SEBI may define additional list of “regions” for Region
specific FOFs.
3. Minimum investment in FOF schemes -95% of total assets (in line with the
categorisation circular). AMC has to ensure that the remaining portion of the
investment shall not be in contrast to the strategy of the scheme.
4. AMCs shall ensure that only those underlying overseas schemes are selected which
have exposure in securities as defined under Securities Contract (Regulation) Act,
1956 and other applicable regulations/guidelines.
The AMC may launch schemes in each of the above mentioned categories of FoFs with
multiple underlying under the following three options:
a) Active option- FOFs investing in multiple active funds.
b) Passive option- FOFs investing in multiple passive funds.
c) Active and passive option - FOFs investing in multiple active and passive funds.
Benchmark
List of appropriate benchmarks that could be used by Mutual funds for the respective category
of FOF schemes is placed at Annexure 1C(ii).
Nomenclature of FOF Schemes
The nomenclature of FOF schemes for each category of FOF schemes is placed at
Annexure 1C(iii).
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Number of FoFs permitted to be launched by an AMC
Number of FoF schemes permitted to the Mutual funds under above-mentioned categories of
FOF schemes is placed at Annexure 1C(iv).
If the number of existing FoF schemes of a Mutual fund under any particular category is more
than the number of FoFs permitted under the particular sub-category of FoF as mentioned at
Annexure 1C(iv), such FoFs will be grandfathered. However, Mutual fund will not be allowed
to launch more FoFs under that particular sub-category.
Re-categorisation of Existing FOF Schemes
Mutual funds are required to ensure that all the FoFs shall comply with the aforesaid
requirements. Further, in case the number of existing FoFs of an AMC under any particular
category/sub-category is greater than or equal to the number of FoFs permitted under that
category/sub-category as mentioned in Annexure 1C(iii):
a) The AMC may merge the existing FoF schemes falling under a category/sub-category
to reduce the number of FoFs under that category/sub-category in compliance with
relevant MF Regulations/ Circulars issued thereunder;
b) If the AMC is somehow not able to merge existing FoFs falling under a category/sub-
category due to scheme features, investment objective, etc., then such existing FoF
schemes may be grandfathered from the requirement of restricted number of FOFs in
particular category/sub-category based on request and rationale received from the
concerned AMC. Further AMCs while making the request for grandfathering for
overseas FOF category of schemes may also include distinct terminology in the scheme
name for the purpose of providing more clarity to the unitholders, such distinct term may
include US Treasury 1-3 year, NASDAQ, etc.
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Annexure 1C(i) – Name of Regions
Sr.No. Name of Regions
1 ASEAN
2 Europe
3 Asia
4 Asia Pacific
5 Africa
6 Middle East
7 North America
8 South America
9 Oceania/Australia
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Annexure 1C(ii) – Benchmark for FOFs
S.No. Type of FoF Benchmark to be used
Equity oriented NIFTY 500 TRI or S&P BSE 500 TRI or Tier 1 Benchmark for closely
1
FOF (Domestic) related to the Theme/factor
Debt oriented NIFTY Composite Debt Index A-III or, CRISIL Dynamic Bond A-III
2
FOF (Domestic) Index or benchmark close to the duration/credit profile
Aggressive
Hybrid FoF
Conservative
Hybrid FoF
Tier 1 Benchmark – Hybrid category
Dynamic
Asset
Allocation
FoF
Policy framework for Composition of Benchmark of
Income Plus Arbitrage FoF
1. The benchmark should represent both debt and
arbitrage schemes , in line with the weights
under asset allocation of the schemes.
Hybrid
3 2. Additionally, the weightages of these
FOF(Domestic)
benchmarks should be at least the minimum of
the asset allocation range of that particular
asset class.
3. AMCs are advised to use an appropriate
combination of the broad indices that represent
Income Plus
each asset class as mentioned below:
Arbitrage FOF
Broad Fixed Income Indices
NIFTY Short Duration Debt Index
NIFTY Composite Debt Index
CRISIL Short Term Bond Fund Index
CRISIL 10 year Gilt Index
CRISIL Composite Bond Fund Index
Arbitrage Fund Indices
NIFTY 50 Arbitrage
CRISIL Arbitrage Index
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4.
Additionally, AMCs need to ensure the following
requirements:
a) While constructing the benchmark for a Income
plus arbitrage FOF scheme, once a benchmark
index is selected for underluing debt and
arbitrage schemes the same should not be
changed. For example – if for debt schemes,
NIFTY Short Duration Debt Index is chosen, it
should not be changed on an ad-hoc basis by
the AMC and may be changed only after
following a due process including prior
intimation/ approval of SEBI.
b) Likewise, once weights for underlying debt and
arbitrage schemes for constructing the
benchmark is decided by an AMC, the AMC may
not change the weights without following due
process including prior intimation/ approval of
SEBI.
c) The weights of underluing debt and arbitrage
schemes in the benchmark may be allotted
suitably based on Scheme Information
Document/ Investment Pattern of Scheme. For
example, it should not happen that while the
actual investment in debt by the scheme is
generally 10%, the benchmark weight for the
debt index is 50%.
d) Further, the respective benchmark to be used for
underluing debt and arbitrage schemes should
be only from the aforesaid limited set of Indices
mentioned hereinabove.
Multi Asset Multi Asset- As per the policy framework for
Allocation composition of benchmark of multi asset allocation
FoF fund category
Commodity Gold + Silver (or any other allowed Commodities)
4 based Weightages of these benchmarks should be at least the minimum of
FoF(Domestic) the investment range of that particular underlying fund.
Benchmark of the underlying overseas MF schemes or broad market
benchmark or weightages of these benchmarks should be at least the
5 Overseas FOF
minimum of the investment range/duration/credit profile of that
particular overseas underlying fund as per the SID.
Benchmark of the underlying overseas MF schemes or broad market
Domestic and benchmark or weightages of these benchmarks should be at least the
6
Overseas FOF minimum of the investment range/duration/credit profile of that
particular overseas underlying fund as per the SID.
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Annexure 1C(iii) – Nomenclature for FOFs
Available Proposed Name
S.
FoF
No.
Active option Passive option Active and Passive option
Equity oriented
FOF(Domestic)
<<Name of Mutual Fund>> Diversified Equity
<<Name of Mutual Fund>> Diversified Equity
<<Distinct Keyword>> Active FOF
<<Distinct Keyword>> Omni FOF
If the investment in the underlying schemes is <<Name of Mutual
If the investment in the underlying schemes is across
across upto 2 caps i.e. large +midcap or Fund>>Diversified
upto 2 caps i.e. large +midcap or flexicap+multicap,
· Diversified FOF flexicap+multicap, then name of the underlying Equity <<Distinct
then name of the underlying caps i.e. large +midcap
1 caps i.e. large +midcap or flexicap+multicap will be Keyword>> Passive
or flexicap+multicap will be used. However, if the
used. However, if the investment in the underlying FOF
investment in the underlying schemes is across more
schemes is across more than 2 caps than the word
than 2 caps than the word "all cap" will be used.
"all cap" will be used.
<<Name of Mutual
<<Name of Mutual Fund>> <<name of Fund>> <<name of <<Name of Mutual Fund>> <<name of
· Sectoral sector/theme/multi sector>> Active FOF sector/theme/multi sector/theme/multi sector>> Omni FOF
/Thematic FOF sector>> Passive FOF
Based on single debt
category - <<Name of
Based on single debt category - <<Name of Mutual Based on single debt category - <<Name of Mutual
Mutual Fund>> <<name
Fund>> <<name of category of debt fund>> Active Fund>> <<name of category of debt fund>> Omni
of category of debt
FOF F O F
fund>>Passive FOF
or o r
Debt oriented or
2 Based on diversified debt category - <<Name of Based on diversified debt category - <<Name of
FOF(Domestic) Based on diversified
Mutual Fund>> diversified debt <<Distinct Mutual Fund>> diversified debt <<Distinct
debt category - <<Name
Keyword>>Active FOF K e y w o r d > > O m n i F O F
of Mutual Fund>>
For Example : Distinct Keyword could be ' Short For Example : Distinct Keyword could be ' Short
diversified debt
Duration + Credit Risk', 'Overnight+Liquid', etc. Duration + Credit Risk', 'Overnight+Liquid', etc.
<<Distinct Keyword>>
Passive FOF
Hybrid
FoF(Domestic)
<<Name of Mutual
· Aggressive <<Name of Mutual Fund>> <<Aggressive Hybrid>> <<Name of Mutual Fund>> <<Aggressive Hybrid>>
Fund>> <<Aggressive
Hybrid Active FOF Omni FOF
Hybrid>> Passive FOF
<<Name of Mutual
· Conservative <<Name of Mutual Fund>><<Conservative <<Name of Mutual Fund>><<Conservative
Fund>><<Conservative
Hybrid Hybrid>> Active FOF Hybrid>>Omni FOF
Hybrid>> Passive FOF
<<Name of Mutual
3
· Dynamic Asset <<Name of Mutual Fund>> <<Dynamic Asset Fund>> <<Dynamic <<Name of Mutual Fund>> <<Dynamic Asset
Allocation Allocation>> Active FOF Asset Allocation>> Allocation>> Omni FOF
Passive FOF
<<Name of Mutual
· Income plus <<Name of Mutual Fund>> <<Income plus Fund>> <<Income plus <<Name of Mutual Fund>> <<Income plus
Arbitrage Arbitrage>> Active FOF Arbitrage>> Passive Arbitrage>>Omni FOF
FOF
<<Name of Mutual
<<Name of Mutual Fund>> <<Multi – Asset>> <<Name of Mutual Fund>> <<Multi – Asset>> Omni
· Multi – Asset Fund>> <<Multi –
Active FOF FOF
Asset>> Pssive FOF
<<Name of Mutual
Commodity
Fund>> <<Name of
4 based - -
commodity/commodities
FoF(Domestic)
>> Passive FOF
5 Overseas FoF
<<Name of Mutual
· Country
<<Name of Mutual Fund>> <<name of country>> Fund>> <<name of <<Name of Mutual Fund>> <<name of country>>
specific Equity
specific Equity Active FOF country>> specific equity specific Equity Omni FOF
FoF
Passive FOF
<<Name of Mutual
· Thematic/Sector <<Name of Mutual Fund>> <<name of Fund>> <<name of <<Name of Mutual Fund>> <<name of
based Equity FoF theme/sector>> overseas Equity Active FOF theme/sector>>overseas theme/sector>> overseas Equity Omni FOF
Equity Passive FOF
<<Name of Mutual
· Region specific <<Name of Mutual Fund>> <<name of Fund>> <<name of <<Name of Mutual Fund>> <<name of
Equity FoF region>>specific Equity Active FOF region>>specific Equity region>>specific Equity Omni FOF
Passive FOF
<<Name of Mutual
· Country <<Name of Mutual Fund>> <<name of country>> Fund>> <<name of <<Name of Mutual Fund>> <<name of country>>
specific Debt FoF specific Debt Active FOF country>> specific Debt specific Debt Omni FOF
Passive FOF
<<Name of Mutual
· Region specific <<Name of Mutual Fund>> <<name of region>> Fund>> <<name of <<Name of Mutual Fund>> <<name of region>>
Debt FoF specific Debt Active FOF region>> specific Debt specific Debt Omni FOF
Passive FOF
Domestic and
overseas FOF
<<Name of Mutual Fund>> domestic and overseas
<<Name of Mutual Fund>> domestic and overseas
diversified equity<<Distinct Keyword>>Active FOF
diversified equity <<Distinct Keyword>>Omni FOF
If the investment in the underlying schemes is <<Name of Mutual
If the investment in the underlying schemes is across
across upto 2 caps i.e. large +midcap or Fund>> domestic and
· Diversified upto 2 caps i.e. large +midcap or flexicap+multicap,
flexicap+multicap, then name of the underlying overseas diversified
Equity FOF then name of the underlying caps i.e. large +midcap
caps i.e. large +midcap or flexicap+multicap will be equity <<Distinct
or flexicap+multicap will be used. However, if the
used. However, if the investment in the underlying Keyword>>Passive FOF
investment in the underlying schemes is across more
schemes is across more than 2 caps than the word
than 2 caps than the word "all cap" will be used.
"all cap" will be used.
<<Name of Mutual
· Sectoral <<Name of Mutual Fund>> domestic and overseas Fund>> domestic and
<<Name of Mutual Fund>> domestic and overseas
6 /Thematic based <<name of sector/theme/multi sector>> Active overseas <<name of
<<name of sector/theme/multi sector>> Omni FOF
Equity FOF FOF sector/theme/multi
sector>> Passive FOF
Based on single debt
category - <<Name of
Based on single debt category - <<Name of Mutual Based on single debt category - <<Name of Mutual
Mutual Fund>> <<name
Fund>> <<name of category of debt fund>> Active Fund>> domestic and overseas<<name of category of
of category of debt
FOF d e b t f u n d > > O m n i F O F
fund>>Passive FOF
or o r
Debt oriented or
Based on diversified debt category - <<Name of Based on diversified debt category - <<Name of
FOF Based on diversified
Mutual Fund>> diversified debt <<Distinct Mutual Fund>> domestic and overseas diversified
debt category - <<Name
Keyword>>Active FOF < < D i s t i n c t K e y w o r d > > O m n i F O F
of Mutual Fund>>
For Example : Distinct Keyword could be ' Short For Example : Distinct Keyword could be ' Short
diversified debt
Duration + Credit Risk', 'Overnight+Liquid', etc. Duration + Credit Risk', 'Overnight+Liquid', etc.
<<Distinct Keyword>>
Passive FOF
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Annexure 1C(iv) – Number of FOFs permitted to be launched by an AMC
S. Active and
FoF Active option Passive option
No. Passive option
Equity oriented
FOF(Domestic)
· Diversified FOF 2 2 2
1 Sector / themes- 1 Sector / themes- 1 Sector / themes- 1
scheme per sector/ scheme per sector/ scheme per sector/
· Sectoral theme theme theme
/Thematic FOF
Multi Sector - 1 Multi Sector- 1 Multi Sector- 1
scheme scheme scheme
Debt oriented
2 2 2 2
FOF(Domestic)
Hybrid
FoF(Domestic)
· Aggressive
1 1 1
Hybrid
· Conservative
1 1 1
Hybrid
3
· Dynamic Asset
1 1 1
Allocation
· Income plus
1 1 1
Arbitrage
· Multi – Asset 1 1 1
Commodity based
4 N.A 1 N.A
FoF(Domestic)
Overseas FoF
· Country specific 1 scheme per 1 scheme per 1 scheme per
Equity FoF country country country
5
Sector / themes- 1 Sector / themes- 1 Sector / themes- 1
· Thematic/Sector
scheme per scheme per scheme per
based Equity FoF
sector/ theme sector/ theme sector/ theme
Multi-Sector- 1 Multi-Sector- 1 Multi-Sector- 1
scheme scheme scheme
· Region specific 1 scheme per 1 scheme per 1 scheme per
Equity FoF region region region
· Country specific 1 scheme per 1 scheme per 1 scheme per
Debt FoF country country country
· Region specific 1 scheme per 1 scheme per 1 scheme per
Debt FoF region region region
Domestic and
overseas FOF
· Diversified Equity
2 2 2
FOF
Sector / Sector / Sector /
6
· Sectoral themes/multi- themes/multi- themes/multi-
/Thematic based sector- 1 scheme sector- 1 scheme sector- 1 scheme
Equity FOF per sector/ per sector/ per sector/
theme/multi-sector theme/multi-sector theme/multi-sector
· Debt oriented
2 2 2
FOF
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ANNEXURE 2: GUIDELINES REGARDING THE MARKET MAKING
FRAMEWORK469
1. Market Making in ETFs
The following broad points shall be considered while designing the market making framework
in ETFs:
1.1. Obligations of AMC: Obligations shall, inter-alia, include:
1.1.1. AMCs to enter into agreement with at least two Market Makers (MMs) for
each ETF.
1.1.2. AMCs may select MMs based on various criteria including experience in the
capital market, capital adequacy, net worth, infrastructure, volume of
business, etc.
1.2. Obligations and responsibilities of a Market Maker: Obligations shall, inter-alia,
include:
1.2.1. Quote: MM shall be mandated to provide a two-way quote during such
minimum time frame for which the MM may be required to make market. MM
shall guarantee execution of orders at quoted price and quantity for quotes
given by it.
1.2.2. Minimum timeframe: The minimum time frame for which the MM is required
to make the market shall be 75% of the time during market hours of a trading
day. Further, MM shall also be mandated to be present in the Best Buy/Sell
order/quote for e.g. top 5 buy/sell order/quote.
1.3. Information to be collected from Stock Exchanges: AMCs to collect the following
information from SEs on daily basis:
1.3.1. Total quantity traded by the MM in a particular ETF and its % trade to total
quantity traded in the market of that ETF.
1.3.2. Minimum, Maximum and Median prices at which the MM has executed the
trades.
1.3.3. Minimum, Maximum and Median spread at which the MM has provided the
quotes.
1.4. Compensation of MM: The issue of compensation is to be decided between the
AMC and the MM. It may have recourse to factors such as trading volume, bid-ask
spread in units of ETFs, and such other information as may be required to formalize
performance based incentive structure.
*****
469 SEBI Circular No. SEBI/HO/IMD/DOF2/P/CIR/2022/69 dated May 23, 2022
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ANNEXURE 3: DETAILS OF ESG STRATEGIES470
1. Exclusion: Exclude securities based on certain ESG related activities, business practices,
or business segments. The strategy should specify
1.1. the characteristic / type of exclusion (Adverse impact, Controversy, Faith)
1.2. threshold or condition for exclusion, and
1.3. reference, where applicable, to any law/ regulation/ third-party standard/ guideline/
framework used in the establishment or evaluation of the criterion.
2. Integration: Explicitly consider ESG related factors that are material to the risk and return
of the investment, alongside traditional financial factors, when making investment
decisions.
3. Best-in-class & Positive Screening: Aim to invest in companies and issuers that perform
better than peers on one or more performance metrics related to ESG matters. The
details/specifics of the metrics should be disclosed.
4. Impact investing: Seeks to generate a positive, measurable social or environmental
impact alongside a financial return and how the Fund Manager intends to achieve the
impact objective.
Provide methodology used to assess the effect that investments have, or may have, on
environmental or social or governance issues. Describe the process for identifying and
avoiding, mitigating, or managing adverse effects that the scheme or underlying
companies' activities have, or may have, on environmental or social issues. The fund
should seek a non-financial (real world) impact and evaluate if that impact is being
measured and monitored.
5. Sustainable objectives: Aim to invest in sectors, industries, or companies that are
expected to benefit from long-term macro or structural ESG-related trends. Describe the
focussed objective including rationale for focussing on that objective.
6. Transition or transition related investments: Aim to invest in companies and issuers
that support/facilitate environmental transition and just transition. The investment should
generate a positive and measurable social and environmental transition.
******
470 Inserted by SEBI Circular No. SEBI/HO/IMD/IMD-I –PoD1/P/CIR/2023/125 dated July 20, 2023
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ANNEXURE 4: RISK MANAGEMENT FRAMEWORK (RMF) FOR MUTUAL
FUNDS471
1. RMF Standards
(i) AMCs shall establish a RMF for its mutual fund business. The RMF of mutual funds
shall have the following characteristics:
a. Be structured, efficient and timely.
b. Be an integral part of the mutual fund’s processes and governance
framework, at both the operational and strategic level, and consider all
available information i.e. both internal and external.
c. Be customized to both AMC's and scheme’s risk profile, focuses on potential
risks and implements mitigation and control measures to explicitly address
uncertainty.
d. Be dynamic and flexible enough to identify new risks that emerge and make
allowances for those risks that no longer exist.
e. Recognize that people and culture have an impact on its effectiveness, and
accordingly the framework must communicate and consult with stakeholders
throughout.
f. Protect reputation.
(ii) The objectives of RMF should assist the management and the Board of Directors
of both AMC and Trustees in:
a. Demonstrating high standards of due diligence in daily management.
b. Promoting proactive management and early identification of risk.
c. Assigning and increasing accountability and responsibility in the organization.
d. Managing risk within the tolerance limits defined in the RMF.
(iii) The RMF of mutual funds shall comprise the following components:
a. Governance and Organization
b. Identification of Risks.
c. Measurement and Management of Risks.
d. Reporting of Risks and related Information.
1.1. Governance and Organization
(i) Risk Management shall be an independent and specific function of the AMC.
471 SEBI/HO/IMD/IMD-1 DOF2/P/CIR/2021/630dated September 27, 2021
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(ii) There should be at least one CXO level officer identified to be responsible for the
risk management of specific functions of the AMC/Mutual Fund. For instance, there
should be dedicated risk officers for various key risks such as Investment Risk (by
Chief Investment Officer), Compliance Risk (by Chief Compliance Officer),
Operational Risk (by Chief Operating Officer or similar functionary responsible for
the respective functions overseen), Cyber Security (by Chief Information Security
Officer), etc.
(iii) The policy on risk management of the mutual fund should have clarity on roles and
responsibility assigned to CXOs and the same needs to be disclosed on their
website.
(iv) AMC should have a Chief Risk Officer (CRO), who would be responsible for the
overall risk management of the mutual fund operation including the key risks. This
is in addition to one CXO level officer responsible for each key risk type. The CXO
shall be the “Head of Department” or official of the AMC up to one level below CEO,
other than CRO. However, for the overall risk management of the mutual fund,
along with the management, both board of AMC and trustees should also be
responsible. For this purpose, both the AMC and the trustees should mandatorily
have separate Risk Management Committees (RMCs). These committees shall
undertake annual review of RMF at both AMC and scheme level. The CRO should
be part of the RMCs. The RMCs shall report to the Board of AMCs and trustees
respectively and also recommend long term solutions regarding risk management
both at the AMC level as well as the scheme level.
(v) There shall be clear demarcation between the roles and responsibilities of the
respective CXOs and the CRO. For instance, while defining the role of CRO, it
should be ensured that the CRO would be responsible for the overall governance
of the RMF; the investment decisions and the other functions of CIO are not
encroached upon and the risk taking ability of CIO in accordance of the scheme
objective is not hindered. The CRO or the risk management function of the CRO
cannot be entrusted with day to day functioning, the responsibility for which shall
lie with the respective CXOs.
(vi) The AMC should maintain risk metric for each mutual fund scheme. The risk metric
should incorporate each key risk type like investment risk, liquidity risk, credit risk,
etc. along with the path to maintain the targeted risk level. The metric may
incorporate evaluation of risk levels vis-à-vis an appropriate benchmark, wherever
applicable. The RMCs shall meet at least once in a quarter to review various risks
including risk metrics at both the scheme and the AMC level and assist the board
of AMCs and trustees in discharging their duties in this regard.
1.1.1. Risk Management Policy
The risk management policy can be a macro level description of risk management
governance (including roles and responsibilities of the Board of AMC and the three
lines of defense – Management, Risk Management Team and Internal Auditor), the
organization's risk appetite and key elements of its risk management process. The
policy on the RMF shall be approved by the board of AMC and trustees. The mandatory
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and recommendatory elements for inclusion in the risk management policy, approved
by the board of AMC and trustees, are outlined below:
1.1.1.1. Mandatory Elements
(i) There shall be an approved policy on the RMF both at AMC and scheme level.
(ii) A risk appetite framework should be in place at both AMC and scheme level.
Quantification of the framework in the form of a metric for key risks shall include
but not limiting to credit risk, market risk and liquidity risk, etc. and targeted path
of improvement. The metric, wherever applicable, should incorporate an
appropriate benchmark vis-à-vis which the measurements of risk and targeted
risk levels may be made.
(iii) There should be a Delegation of Power (DoP) framework covering daily risk
management, daily risk reporting and corrective actions at various levels of
management.
(iv) Formation of RMCs (of both AMC and Trustees), its roles and responsibilities.
(v) Each CXO level officer to take ownership of risks and manage risk level for those
risks as are applicable to their area of operation.
(vi) Clarity on roles and responsibility assigned to CXOs
(vii) Responsibility of line management and process ownership for risk management
and reflection of the same in the performance appraisal through Key Result
Areas (KRAs) of key officials of line management. The performance may be
evaluated vis-à-vis an appropriate benchmark, if applicable.
(viii) All aspects of risks that the AMC can face along with the mitigation plans,
including but not limited to:
a. Risk management practices in fund management, customer service, marketing and
distribution.
b. Disaster recovery and business contingency planning.
(ix) Limit management framework for the material or key risks.
(x) Risk assessment & monitoring measures and tools for all risks with quantified
risk indicators and limits thereto.
(xi) Implementation of scenario analysis and stress testing.
(xii) Risk mitigation requirements and control mechanisms.
(xiii) Additional triggers that could require review of the RMF, including:
a. Material claims or litigations from customers or incidents.
b. Material findings from internal or external audits.
c. Adverse media attention impacting reputation risk.
d. Adverse observations from the regulator(s), etc.
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e. Key risk indicator breaches.
f. New regulatory requirements.
g. Sector-relevant developments or incidents.
1.1.1.2. Recommended Elements
i. Use of technology to automate risk management, reporting and compliance.
1.1.2. Risk Management Function – Responsibility of Board of AMC, Trustees
and the Management
1.1.2.1. Risk Management - Role of the Board of AMC and Trustees
(i) Approving the RMF policies and procedures including the risk metrics at scheme
level.
(ii) Defining, reviewing and approving the AMC’s and scheme’s risk appetite
framework.
(iii) Periodic monitoring of risk appetite versus actual risk at scheme level.
(iv) Event based monitoring of Risk appetite versus actual risk at scheme level.
(v) Define specific responsibility of the management, including CEO
(vi) Approval for policy for risk based KRAs and KRAs at level of CEO and up to one
level below CEO. Suggest modifications in KRA outcomes and link
compensation to those KRAs.
(vii) Review of actions taken by Board of AMC and management in respect of risk
management.
(viii) Reporting of material risk related observations to SEBI on periodic basis.
(ix) Setting up of the risk management function and developing appropriate
structures and procedures to ensure that it can function independently.
(x) Approving a methodology for Board Evaluation of the RMF (either through
outsourced or self-assessment) on an annual basis.
(xi) Annual review of effectiveness of the AMC and/or management’s risk
management function and policies including risk metrics to address the risk
outcomes.
(xii) Trustee may recommend reduction/ change in the risk level of the schemes
within the Potential Risk Class (PRC).
(xiii) For assessing the effectiveness of the RMF,
a. The board of AMC should seek an annual report through an internal management
assessment process or from a third party covering all key risks and key risk metrics
both at the AMC and scheme level.
b. The RMCs of both AMCs and Trustees shall meet at least once in a quarter to review
various risks including the risk metrics at both AMC and scheme level.
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c. The Board of AMC should have all relevant information of appropriate committee(s)
(with the mandate and membership), CRO, CXO(s) for specific risk management, audit
functions, investor relations, investment and credit decisions, etc.
1.1.2.2. Risk Management - Role of the Management
(i) The risk management role of the management can be broadly classified into risk
management roles and responsibilities of the CEO, CRO, CIO, CXOs and the fund
manager.
(ii) The overall role of the management shall be as below:
a. Overseeing the risk management function.
b. Keeping the Board of AMC and Trustees informed on new or emerging risks.
c. Putting in place a mechanism for risk reporting on quarterly basis to the Board of AMC
and trustees, covering all risks including risk metrics, escalation of material risk related
incidents, if any, and timely and corrective actions taken in specific cases of risk
escalation. This may be carried out with an objective to address the root cause in
escalation of such risks and also to improve the measurement and control mechanism
for prevention of reoccurrence of such risks.
d. Establishing an organization-wide risk-conscious culture.
e. Inclusion of risk management as a parameter for performance appraisal (through KRAs
or equivalent) of all the officials of the AMC at the level of CEO and up to two levels
below CEO.
f. Establishing human resource practices pertaining to hiring, orientation and training in
order to send messages to employees regarding the organization's expected
standards on integrity, ethical behavior, competence and risk management.
1.1.2.2.1. Risk Management - Role of Chief Executive Officer (CEO)
(i) The CEO shall be responsible for all the risks at both AMC and Scheme level.
(ii) The CEO shall
a. ensure that the outcomes of risk management function are reported to him on
a monthly basis
b. define specific responsibility of CIO and CXO regarding risk management
c. define a risk appetite framework for schemes and AMC.
d. define appropriate risk metric for respective CXO, CIO, fund manager, etc.
e. ensure adherence to the guidelines pertinent to SEBI in respect of RMF and
relevant principles thereunder including risk identification, risk management,
risk reporting (both periodic and escalation of material incident) and corrective
actions taken, if any.
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f. The CEO shall approve the corrective action on various findings and report to
the board of AMC and trustee regarding the same and also escalate to board
of AMCs and trustees, if required, any major findings being reported.
1.1.2.2.2. Risk Management - Role of Chief Risk Officer (CRO)
(i) The CRO shall be responsible for ensuring that there is an effective
governance framework and reporting framework of risk management in line
with the regulatory requirements.
(ii) The risk management roles of the CRO are as under:
a. Implementation of Risk management framework across the organization.
b. Review specific responsibility of management, including CEO, CIO, CXOs, and
Fund Managers.
c. Put in place mechanism for risk reporting at least on a quarterly basis to the
board of AMC, trustees and RMCs, covering all risks including risk metrics,
escalation of material risk related incidents, timely and corrective actions taken,
if any.
d. Independent assessment of reporting of risk to various committees and CEO,
etc.
e. Put in place mechanism for reporting to CEO - Including outcomes for risk
management function on monthly basis.
f. The reporting of risk as above is independent from the CIO and verified by the
risk team.
g. There is a DoP approved by the Board of AMC for risk management by CRO
covering the following:
1) Daily risk management
2) Daily risk reporting
3) Corrective actions at the level of Fund manager, CIO and CEO.
h. The CRO shall inform to board of AMCs, trustee and risk committees regarding
any major findings or corrective actions required and also update on closure or
the status of various recommendations.
1.1.2.2.3. Risk Management - Role of Chief Investment Officer (CIO)
(i) Daily management of risk and necessary reporting relating to Investment risk
of all scheme(s) such as market Risk, liquidity Risk, credit risk etc. and other
scheme specific risks (Compliance Risk, Fraud Risk, etc.) lies on the CIO.
(ii) In respect of all schemes CIO should ensure:
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a. Adherence to the guidelines pertinent to SEBI in respect of RMF and relevant
principles thereunder including risk identification, risk management, risk
reporting (both periodic and escalation of material incident) and corrective
actions taken, if any.
b. Defining specific responsibility of Fund Managers
c. Adherence to risk appetite framework - maintain risk level for schemes
(iii) CIO will calculate the overall risk by taking in to account the weighted average
of (i) the risk-o-meter and (ii) the events of defaults. Both (i) and (ii) are to be
calculated in terms of a number taking into account the risko-meter and events
of defaults or early mortality of investments which may inter alia include credit
default, change in yield, change in NAV, external shock or unusual
redemptions, etc. to quantify the overall risk.
(iv) The CIO shall escalate the corrective actions taken, if any, to the CEO and the
CRO.
1.1.2.2.4. Risk Management - Role of other CXOs
(v) The CXOs shall be responsible for the governance of the respective risk
types.
(vi) In respect of respective risk type, CXO should ensure:
a. Adherence to the guidelines pertinent to SEBI in respect of RMF and
relevant principles thereunder including risk identification, risk
management, risk reporting (both periodic and escalation of material
incident) and corrective actions taken.
b. Defining specific responsibility regarding risk management of key
personnel reporting to them.
c. Maintaining risk level as per the risk metric.
(vii) The CXOs shall take immediate corrective action for non-compliance or major
finding post approval from CEO as per DoP and shall report to CRO regarding
the risk reports.
(viii) The CXO shall escalate to CEO and the CRO any major findings reported by
respective risk management function.
1.1.2.2.5. Risk Management - Role of Fund Manager (FM)
(i) The FM shall be responsible for daily management of investment risk of
managed scheme(s) such as market Risk, liquidity Risk, credit risk and other
scheme specific risks and appropriate risk reporting of any risk related event
to CIO.
(ii) In respect of schemes managed by them, FMs should ensure:
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a. Adherence to relevant SEBI guidelines in respect of RMF and relevant
principles thereunder including risk identification, risk management,
reporting and corrective actions etc.
b. Adherence to risk appetite framework to maintain appropriate risk level
for schemes.
c. If there is any need of change in the risk appetite of the scheme within
the PRC of that particular scheme, the same is to be with the approval of
the CIO.
(iii) The FM shall take corrective action, if required, as per the approved DoP and
escalate major risk related event to CIO.
1.2. Identification of Risks
For the identification of risks, the RMF should address the following key questions:
1.2.1. What are the different types of risks faced by the mutual fund/AMC and its
mutual fund schemes?
1.2.2. What is the probability of the happening of each of the above risks, considering
the control environment and automation within the AMC, external factors or
dependencies such as market infrastructure, outsourced activities, etc. and
available historical risk data?
1.2.3. What is the likely impact of key risk events, in terms of financial loss, reputation
loss, impact on investors/ unit holders and regulatory action?
1.2.4. What are the emerging or new risks due to new business lines, new products,
statutory changes, changes in external environment or market infrastructure,
etc.?
1.2.5. The mandatory and recommendatory elements for identification of risks, are
outlined below:
1.2.5.1. Mandatory Elements
(i) Each AMC shall identify on an ongoing basis, the specific risks to be covered
within the RMF, based on the nature, scale and complexity of its business, the
risk profiles and strategies of the funds it manages, and the impact of different
risks on its mutual funds business.
(ii) Documented risk profile for each of the key functions incorporating events that
might create, enhance, prevent, degrade, accelerate or delay the achievement
of objectives, sources of risks and areas impacted due to the event.
1.2.5.2. Recommendatory Elements
(i) Formalized risk appetite statement (incorporating themes such as investment,
sales, and operational losses as a result of in-house or outsourced activities)
both at the scheme and AMC level.
1.3. Measurement and Management of Risks
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1.3.1. AMC should have approved internal policy for measurement of various scheme
specific risks (such as governance risk, investment risk, liquidity risk, credit risk)
through appropriate risk metrics.
1.3.1.1. It should reflect the Risk-O-Meter and the PRC of the scheme vis-a-vis the
scheme benchmark.
1.3.1.2. The policy should have the defined guidelines regarding the appropriate
risk metric with role clarity depending on the responsibility of each person.
1.3.2. AMCs should have approved internal policy for measurement of organization
wide risk like operational risk, technology risk, legal risk, talent risk, outsourcing
risk, etc.
1.3.3. Having identified and documented the applicable risks, the risk management
function should develop process/tools to measure and manage those risks. For
this purpose, the following needs to be considered for each risk category:
(i) Ascertaining the measurement criteria for each risk category (qualitative and
quantitative criteria).
(ii) Documentation of measurement tool(s) for each risk category, i.e. Risk and
Control Self-Assessment (RCSA), stress testing, scenario analysis, etc.
(iii) Determination of required frequency of monitoring.
(iv) Developing a process for escalation.
(v) Determination and documentation of remedial or mitigating actions.
Wherever appropriate, it is recommended that AMCs consider documenting risk
limits based on their risk appetite.
1.3.4. The mandatory and recommendatory elements for measurement and
management of risks, are outlined below:
1.3.4.1. Mandatory Elements
(i) The AMCs shall have established structure and responsibility across the three
lines of defense:
a. Business Operations.
b. Oversight functions like Risk Management and Compliance.
c. Internal Audit.
(ii) Internal Audit and Oversight functions like Risk Management and Compliance
shall ensure the following:
a. There should be a dedicated internal auditor at the AMC level for audit of
the RMF of the AMC.
However, the same may be carried out by independent auditor appointed
by trustees, provided that the personnel undertaking the said audit have
relevant expertise in the domain of risk management necessary for both
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the AMC level and the scheme level audit. In such scenario, care must be
taken that no conflict arises w.r.t submission of independent audit reports
by the auditor to the audit committee and the Board of both the AMC and
the trustees for the conduct of their respective audit functions.
b. The internal auditor should audit both the scheme level and AMC level
risks.
c. The internal auditor should audit compliance with the internal policies of
the AMC on risk management as well as the applicable rules and
regulations mandated by SEBI on risk management.
d. For the processes being audited by the internal auditor, a noncompliance
rate shall be computed. The non-compliance rate may be computed based
on sampling out of the total number of processes being audited.
e. The internal auditor should submit the internal audit report to the audit
committee of the AMC and the Board of AMC representing the
noncompliance rate as audited in the books of accounts of the AMC and
its schemes. While submitting to the audit committee, the noncompliance
level shall be converted to an overall internal audit score represented in
the form of a number providing a quantitative representation of the internal
audit report. This number shall be generated considering all key risk types.
f. Further, this number shall be compared in subsequent internal audits to
analyze the improvement in minimizing the non-compliance level at the
AMC. This shall reflect the degree of rectification of noncompliance as
done at the level of AMC. Therefore, this number may be represented in
the form of a “Rectification Index” in the internal audit report.
(iii) There shall be an RCSA process with defined frequency.
(iv) There shall be an established mechanism for reporting to the CRO,
management and the Board of AMC and Trustees.
(v) Periodic review of policy frameworks shall be done to ensure that the said
policies are up-to-date responding to new strategic priorities and risks and the
monitoring mechanisms are working to ensure compliance with the updated
policies.
(vi) Mechanisms are established for management to make use of early warning
indicators to identify, evaluate, and respond to changes quickly.
(vii) Periodic stress tests are performed on critical risks and the impact of risks are
assessed based on acceptable tolerances.
(viii) Based on the management of the risk level as defined by respective risk metric
of CXOs, necessary corrective actions must be taken to address any short
comings. The output of the risk level shall be an indicator of the performance
of the respective CXOs and shall form one of the inputs for their performance
review.
1.3.4.2. Recommendatory Elements
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(i) There should be independent testing and verification of efficacy of corporate
governance standards and business line compliances, validation of the RMF
and assurance over the risk management processes by external agency.
1.4. Reporting of Risks and Related Information
1.4.1. Adequate risk reporting is an integral part of the risk management framework
and it is important that those responsible for different functions within the AMC
shall ensure that they exercise sufficient oversight to report on their risk profile
and risk management actions.
1.4.2. The mandatory elements for reporting of risk and related information, are
outlined below:
1.4.2.1. Mandatory Elements
(i) In order to ensure that the risk management function obtains the necessary
information from other departments as well as from outsourcing partners
(wherever applicable), a structured bottom-up reporting process should be
designed and the risk management function should perform meaningful and
independent analysis of such information.
(ii) The outcomes of the risk management function should mandatorily be reported
to the management at least once on a monthly basis and to the Board of AMC
and Trustees on a quarterly basis. Trustees may forward the results and steps
taken to mitigate the risk along with their comments to SEBI in the half-yearly
trustee reports.
(iii) Risk reports should consider the following:
a. It should be holistic (considering all risk categories identified), timely and
accurate.
b. It should incorporate the risk metrics comprising the risk profile of all
schemes and the risk profile consolidated across the departments and the
AMC level. It should also incorporate the rectification index as calculated
in the internal audit report for both the AMC and the scheme level.
c. It should contain all necessary information to assess whether appropriate
measures have been taken by the management to control and mitigate all
relevant risks.
d. It should provide information on existing as well as new risks including a
statement on severity (e.g. low, medium, high) and its evolution over time,
and the measures to mitigate existing risks where possible.
(iv) The Risk management function shall ensure that any significant emerging risk
issues that are not adequately addressed by the responsible functional
department are promptly reported to the management or the risk management
team and to the Board of AMC.
2. Managing Key Risks
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a. MF Regulations vide various circulars has prescribed certain norms which would cover
many aspects of risk management such as, stress testing, internal credit risk
assessment, cyber security and system audit, liquidity buffer, creation of segregated
portfolio, investment restrictions, investment due diligence, etc. that are to be adhered
to by the mutual funds. The following sections incorporate comprehensive guidelines
for management of various key risks by the AMCs, elements of which may overlap with
the above mentioned norms and in such cases, the detailed norms specified in the
relevant circular must be strictly followed.
b. These key risks may be divided in to two broad categories.
i. Scheme specific risks
ii. AMC specific risks
c. The scheme specific risks are the risks majorly associated with the core activities of
investment and portfolio management. The AMC specific risks are the risks associated
with the functioning of the mutual fund business by the AMC.
d. The scheme specific risks may be divided in to the following categories.
i. Investment risk
ii. Credit risk
iii. Liquidity risk and
iv. Governance risk
The AMC specific risks may be divided in to the following categories.
i. Operational Risk
ii. Technology, Information Security and Cyber Risk
iii. Reputation and Conduct Risks
iv. Outsourcing Risk
v. Sales and Distribution Risk
vi. Financial Reporting Risk
vii. Legal & Tax Risks and
viii. Talent Risk
The compliance risk shall be applicable for both investment management activity (scheme
specific risk) and business activity of AMC (AMC specific risk).
The following sections incorporate comprehensive guidelines for management of the key
risks
2.1. Investment Risk
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2.1.1. Investment risk can be defined as the probability or likelihood of occurrence of
losses relative to the expected return on any particular investment.
2.1.2. Investment risk management should be based on reasonable investor
expectations about the risks that the mutual fund will take in order to achieve
its investment objectives, which can be thought of as the fund’s risk profile or
risk appetite. A fund's risk profile should be stated in its communications with
investors including in its Scheme Information Document (SID) and marketing
materials, which state the fund's investment strategies and risk factors. The SID
shall also incorporate any other elements of risk appetite as may be stipulated
by AMCs and Trustees.
2.1.3. Investment risk management should involve both controlling risk by limiting
certain risk exposures and the size & probability of losses, as well as using a
number of active investment techniques that seek to align the fund’s
investments with its investment objectives, its risk profile, and the portfolio
manager's investment convictions.
2.1.4. Risk control should focus on placing limits on a fund’s investment positions and
concentrations. These limits should include the investment restrictions
mentioned in the fund’s SID as well as any limits and restrictions imposed by
the risk management function within the regulatory limits. Risk control activities
may include reviewing portfolio concentrations and adjusting portfolio holdings
accordingly; evaluating and reviewing new and/or complex instruments, such
as derivatives, and imposing conditions and limits on their use; monitoring and
limiting credit exposure from issuers of portfolio securities and from
counterparties; and ensuring that a fund is managed in compliance with the SID
and the regulatory investment restrictions.
2.1.5. The mandatory and recommendatory elements for managing investment risk,
are outlined below:
2.1.5.1. Mandatory Elements
(i) The AMC should have the following policies / process:
a. An investment universe to be updated periodically and responsibility for the
same should be clearly defined.
b. An investment policy for investment in various asset classes/ securities as
permitted by SEBI from time to time and policy on hedging of interest rate
risk, foreign exchange risk, price risk, etc.
c. Policy on participation in IPOs/FPOs including policy on participation in
IPOs/FPOs of associate/ group company(ies).
d. Trade execution policy.
e. Policy on trade allocation and Inter-Scheme Transfers (ISTs).
f. Investment valuation policy.
g. Broker empanelment policy.
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h. Trustee should review the portfolio at frequency as required by MF
Regulations.
(ii) The AMC must ensure that investment risk is adequately factored in by:
a. Setting up an Investment committee which has close coordination with
related departments, and monitors market risk.
b. Setting limits for issuer/ sector exposure vis-a-vis benchmark (in line with MF
Regulations and internal limits).
c. Setting limits for investment in debt and money market instruments of
various credit qualities.
d. Having all relevant documents and disclosures (that are required for listing)
with regard to the debt and money market instruments before finalizing the
deal for investment into the respective instruments so that mutual funds as
investors into such instruments are not at an informational disadvantage vis-
à-vis other market participants or lenders.
e. Review of passive breaches and corrective actions.
(iii) Investment Committee shall be responsible for the following:
a. Review of Investment Policy at a pre-defined frequency.
b. Reviewing the Investment plan or policy to meet the investment objectives
documented in the SID.
c. Any other responsibility as assigned by the management.
(iv) The AMC should conduct the following to manage and monitor investment
risks (at scheme level or aggregate portfolio level, whichever is applicable):
a. Redemption analysis.
b. Investor concentration analysis. Both single investor and/or group
concentration.
c. Monitor investment risk at a defined frequency.
d. Managing and monitoring investment restrictions for overseas investment,
if any.
e. Monitor investment risk at individual portfolio level and also concentration
risk and other relevant risks at aggregate level in a structured manner.
f. Stress testing for investment risk.
g. Consider investment risk while launching new products.
h. Ensure that Trade Allocation policy is adhered to along with adequate
information to identify those allocations that are out of line with the normal
percentage allocation across funds.
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i. Quantitative risk analysis using metrics such as VaR, Sharpe Ratio,
Treynor Ratio, Information Ratio, etc.
j. Prepare and maintain management reports on topics discussed and
conclusions made at investment committee meetings (including interest
rate prospects, risk-taking and hedging policy, etc.)
k. Distributor concentration analysis.
(v) Further, it should be ensured that:
a. Actual risk measures and reports are adapted to the risk characteristics of
the individual asset classes, and capture dependencies between risks (e.g.
market risk and liquidity risk).
b. Actual risk measures address risks in normal and stressed market
conditions.
c. Actual risk measures cover all risk types in the portfolio, including
counterparty credit and liquidity risks (assets, investors).
d. Appropriate tools are adopted for measurement of market and credit risks
on different types of investment products.
e. Adequate processes and controls are in place to ensure that risk reporting
is complete, accurate, timely and meets the needs of various stakeholders.
f. Adequate documentation of calculations, analyses and decisions is
maintained.
g. Performance and positions with regard to objectives of schemes are
reviewed.
h. Performance vis-à-vis scheme benchmarks and performance of peer
group(s) is reviewed.
i. Exceptions are defined and their monitoring is conducted.
j. Exceptions in style drift and portfolio concentration are reviewed.
k. In cases of inter scheme transfer, the scheme (s) buying the securities
must conduct an enhanced level of due diligence.
2.1.5.2. Recommendatory Elements
The AMCs may consider the following practices:
a. Regular analysis on bulk trades and block deals of large values.
b. Formulating a plan for assessing and monitoring risks of investing in multiple
markets.
c. Setting limits for minimum number of stocks/securities, cash (net of
derivatives), stocks/securities vis-a-vis benchmark and Beta range.
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2.2. Credit Risk
2.2.1. The credit risk relevant to mutual funds is the issuer credit risk attributable to
individual securities and the negative outlook on specific sectors or industries
and its consequent impact on the credit exposures.
2.2.2. The mandatory and recommendatory elements for managing credit risk, are
outlined below:
2.2.2.1. Mandatory Elements
(i) To manage credit risk, the AMC must have a robust framework comprising:
a. An approved and documented Credit Risk Management policy.
b. Analysis and evaluation of ratings received from multiple credit rating
agencies for securities across portfolios, at all points of time i.e. before
investing in such securities/instruments or products and also on continuous
basis.
c. Formal procedure for AMCs to carry out their own credit assessment of
assets and reduce reliance on credit rating agencies. For this purpose, all
AMCs shall have an appropriate policy and system in place to conduct an
in-house credit risk assessment or due diligence of debt and money market
instruments or products at all points of time i.e. before investing in such
instruments or products and also on continuous basis.
d. Adequate provisions to generate early warning signals (including yield
based alerts) on deterioration of credit profile of the issuer. Based on
the alerts generated, the AMCs shall take appropriate measures and report
the same to trustees.
e. Concentration limits (counterparty wise, group wise, industry or sector wise,
geography wise) monitoring.
f. Stress testing for credit risk - applying shocks based on rating downgrades,
negative outlook on specific industries and the consequent impact on credit
exposures.
2.2.2.2. Recommendatory Elements
(i) Over a period of time and having regard to the size, scale and complexity of
the fixed income portfolio, AMCs may consider developing sector level
standards for implementing internal credit assessment based models to
measure credit risk in line with the prevailing global best practices.
2.3. Liquidity Risk
2.3.1. Thinly traded securities carry the danger of not being easily saleable at or near
their real values. Further, all securities run the risk of not being saleable in tight
market conditions at or near their real values. Measuring and monitoring
liquidity risk is an important aspect of risk management.
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2.3.2. The mandatory and recommendatory elements for managing liquidity risk, are
outlined below:
2.3.2.1. Mandatory Elements
(i) Liquidity Risk has to be modelled at the level of each scheme (except schemes
that do not have continuous liquidity requirements like close ended and interval
schemes) and should display alerts pertaining to asset liability mis-match on
monthly basis and in line with any other relevant guidelines as specified by
SEBI in this regard from time to time. The aforesaid model, should be based
on the following key principles:
a. The secondary market liquidity of assets of the scheme, shall be
incorporated into the liquidity risk management model.
b. For debt and money market instruments, the total asset value shall be
classified in various maturity buckets for e.g. assets maturing in days 0-30,
30-60, 60-90 and so on. Debt and money market instruments that have a
demonstrable secondary market liquidity shall be classified into a lesser
maturity bucket depending upon the reasonable time in which particular
value of the said instrument can be expected to be offloaded. In the
absence of demonstrable secondary market liquidity, the instruments shall
be strictly classified based only on the maturity dates.
c. Liabilities of scheme shall be modelled in similar buckets based on back
testing of historical data for subscription and redemption amounts in the
respective schemes. The back testing period should be sufficiently long
(say for last 5 years) to include spikes in redemptions because of market
wide events. Organization specific factors/risks that may have a bearing on
redemptions should also be factored into the model.
d. Liquidation of assets at near the value ascribed to each asset in the
scheme portfolio in specified period of time, shall be one of the factors to
be considered in liquidity risk management.
e. The model should incorporate forward looking asset liability mis-match for
the scheme at different periods of time at least up to next 30 days.
(ii) The AMC should have policy in place on management of the mis-match in
putative liabilities vis-à-vis the liquid assets of each scheme. It should follow
the following principles:
a. There should be an upper limit or threshold on the mis-match in putative
liabilities vis-à-vis the liquid assets of each scheme. The upper limit shall
be customized depending on size or type of the scheme.
b. There should be a system based mechanism to generate alerts as per
point(a) above.
c. The policy shall include monthly reporting to Board of AMC and Trustees
and on quarterly basis to SEBI in a standard format (prescribed by AMFI in
consultation with SEBI).
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d. The report shall include the details of alerts generated by the system
regarding asset liability mis-match in excess of the defined threshold and
subsequent actions taken to address the same. The scheme wise mis-
match limits shall be put in the system and all alerts shall be managed
effectively.
(iii) Stress testing should be mandatorily conducted for all schemes (excluding
close ended and interval schemes) appropriately atleast on monthly basis. The
results of the stress testing may be placed before trustees in every quarter.
Trustees may forward the results along with their comments and steps taken,
if any, to SEBI in the half-yearly trustee reports. With respect to stress testing
of open ended debt schemes, norms have been provided under Paragraph 5.2
of this Master Circular and the same must be adhered to and any future
guidelines issued by SEBI in this regard may suitably be followed.
(iv) The policies and procedures implemented by the AMC should include the
following:
a. Measures and limits for monitoring liquidity risk - cash flow approaches,
ratios/tools for monitoring market liquidity (including equity market), etc.
b. Measures for managing intra-day liquidity and controls around the same.
c. Stress testing policy to align the stress testing requirements mandated by
SEBI for mutual funds in India specifically incorporating:
1. Risk parameters used and methodology adopted to conduct the stress
tests.
2. Procedure to deal with stress events and early warning signals.
d. Overview of funding plans/strategy during normal and stressed events,
including contingency funding plan.
(v) Systematic classification and evaluation of liquidity risks should be initiated by
performing following activities:
a. Evaluation and disclosure of liquidity risk associated with
schemes/products in the SID.
b. Controls around preparation and accuracy of cash flows.
c. Management of collateral and margins for execution and settlement of
derivatives, securities and money-market instruments.
2.3.2.2. Recommendatory Elements
(i) AMCs may consider introducing the following measures:
a. Judicious use of intraday / overnight borrowing lines to address liquidity /
settlement risks faced by the mutual funds. Uncommitted lines of credit
available with the AMC may not be useful in real time of stress and
therefore while assessing liquidity risk of AMC, these lines should be
treated differently than committed lines.
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b. Internal committee with the mandate to review and provide direction on
liquidity risk management.
c. Identifying and reporting appropriate and relevant information to the
management, for decision making.
d. Reporting to the Board of AMC on any other material outcomes and events.
2.4. Governance Risk
2.4.1. Governance risk is a risk that the persons who are in position of power or
fiduciary responsibility towards the holders of security (equity/debt), do not act
in the best interest of such stakeholders, rather compromise the interest of such
stake holders for their personal gain.
2.4.2. The act of people with power may significantly impact the equity market price
of the shares along with having a direct impact on debt issuances.
2.4.2.1. Mandatory Elements
a. The AMC shall have an approved policy to deal with governance risk of the
investee companies.
b. The policy shall incorporate measures such as assessment of whether
there are enough system checks and balances in the governance structure
of the issuer to prevent such wrong doing and also assessment of track
record or history of the issuer to monitor the trend of their past behavior.
c. The policy shall also include guidelines on how it identifies and monitors
any conflicts of interest involving members of the Board/ KMPs of the
investee company.
d. The AMC shall adhere to the “Stewardship Code” prescribed by SEBI for
mutual funds which inter alia includes continuous monitoring of the
investee companies on various matters such as operational and financial
performance, corporate governance, related party transactions,
opportunities or risks including ESG risks, etc., bearing in mind the SEBI
(Prevention of Insider Trading) Regulations while seeking information from
the investee company for the purpose of monitoring etc.
2.5. Operational Risk
2.5.1. Operational risk refers to the risk of loss resulting from inadequate or failed
processes, people and systems or from external events, e.g. internal fraud,
external fraud, physical damage caused by nature or man-made, etc.
2.5.2. As operational risk could manifest in any function or process within the
organization or at a third party service provider, it is important to have adequate
monitoring and tracking of all elements that can go wrong. This includes fails,
reconciliation differences, customer complaints, guideline breaches, systems
issues, process gaps, system bugs, etc. It is equally important to have an
escalation process as any undue delay in reporting could magnify the loss or
turn a gain into a loss.
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2.5.3. The key for effective operational risk management should be to create a
process that tracks the various elements of operational risk over time, to identify
trends that could be an early warning signal, and to implement an
exception/escalation process that ensures the problems which are significant,
large, aged or growing dealt with at increasingly higher levels of management.
2.5.4. Paragraph 7.25 of this Master Circular has provided indicative guidelines
encompassing system audit framework. The systems and processes as
elaborated in the aforementioned paragraphs must be in place and any future
guidelines issued by SEBI in this regard may be suitably followed.
2.5.5. The mandatory elements for managing operational risk, are outlined below:
2.5.5.1. Mandatory Elements
(i) The AMC should implement the following policies:
a. Operational risk management policy, shall cover the following key elements:
1. Purpose and scope.
2. Governance Structure - Roles and Responsibilities.
3. Identification of operational risk events.
4. Management of the operational risk events, e.g. reversal of positions,
rectifications, etc.
5. Guidelines regarding transactions with associates, group entities,
related parties or even with other stakeholders, such as distributors,
channel partners, brokers, etc.
6. Escalation and reporting.
7. Compensation of loss, if any.
8. Follow-up actions, e.g. strengthening of systems and processes,
training, etc.
9. Communication with external stakeholders - regulators, investors,
distributors, etc.
10. Implementation of a ‘new product approval' process to ensure that all
functions have the systems, people, processes to support a new product
11. Recording and documentation.
b. The Dealing room policy incorporating the non- usage of mobile, restricted
internet access, dedicated recorded lines, handling of information, etc. In
this regard, the detailed guidelines on this aspect as provided in Paragraph
7.15 of this Master Circular as well as in the part B of Fourth Schedule of MF
Regulations or any further SEBI guidelines may be referred to.
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c. Roles and responsibilities are defined for the following:
1. Time stamping, application processing and confirmation,
2. Review of KYC and investor declarations as specified through various
SEBI regulations,
3. Timely and accurate credit identification (for investor subscription) and
bank reconciliations (banks/custody).
4. A system to track and report high value transactions (including bulk
redemptions) to the Investment management function.
5. Control oversight on brokerage computation and payment,
redemptions, inter-scheme switches, maturity payments in closed
ended funds, dividend payouts, tax and other statutory payments,
subscription refunds, identification of unclaimed amounts and their
deployment as per regulatory requirements, etc.
6. Review of ‘value dated’ transactions, reversals, broker/ distributor code
changes, etc.
7. Incident reporting and escalation matrix for the same.
8. Maintaining a Chinese wall between the different businesses earned out
by the Asset Management Company (such as PMS, AIF, Overseas
Investments, Advisory, Mutual Funds, etc.)
9. Documented process to review human errors in transaction processing
to identify training needs and corrective actions to prevent the errors in
the future.
d. There is an adequate RCSA process for operational risks on a periodic basis
with a structured reporting methodology.
e. The AMC should perform the following:
1. Analyze and classify frauds into internal (within the organization) and
external (by persons outside the organization) frauds, identify root
causes and incorporate monitoring mechanisms to address fraud
scenarios.
2. Reporting of frauds and near miss incidents to the Board of AMC and
Trustees on quarterly basis.
f. Insurance cover shall be obtained for first and third party losses:
1. The mutual fund must have insurance cover against third party losses
arising from errors and omissions:
(a) Third party liabilities refer to liabilities arising out of financial loss to
investors or any other third party, incurred due to errors and
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omissions of directors, officers, employees, trustees, R&T agents,
custodians etc.
(b) The level and type of cover should be recommended by the AMC
and approved by the Trustees.
2. Further, the AMC shall have insurance to cover first party losses:
(a) First party losses are those which impact the insured and include
asset based losses (due to natural or unnatural disasters such as
fire, flood, burglary, etc.) as well as financial or data losses.
(b) They also include losses due to the acts of employees of the
insured and computer based crimes such as hacking or virus
attacks that may impact the data of the mutual fund, etc.
(c) Key details of the same, together with claims thereunder, shall be
annually reported to the Trustees.
g. The AMC should have an integrated system (front-mid-back) to perform the
following functions:
1. Order generation
2. Position-keeping (Positions on all supported products are updated in
real time). Trades can be accounted for by an electronic feed.
3. Pre-trade compliance checks
4. Order execution
5. Deal booking
6. Straight-through processing to allow one-time capture of trade details.
7. System check on preset parameters and reporting of breaches e.g.
whether investments made in permitted securities or limits on deal size,
etc. have been adhered.
8. Automatic time-stamping of deals.
9. Maker-checker authorisations.
10. Exception reporting.
11. Generation of deal confirmations.
12. Monitoring of outstanding confirmations, settlements and payments.
13. Cash management.
14. Integrated reporting across the Mutual Fund.
15. The back office system should facilitate daily fund projections to
ascertain liquidity and settlement requirements.
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h. The AMC should have documented procedures for the following:
1. Trade confirmations, settlements.
2. Cash flow Management.
3. Collateral Management.
4. Corporate Actions.
5. Margin Management.
6. Security Master Creation.
7. Pricing and Valuation.
8. Corporate action tracking and accounting.
9. Oversight on Service Providers – Custodians, Fund Administrators -
SLA tracking, Parallel Valuation and calculation of NAV. The oversight
over custodians shall inter alia include, receipt of daily position report
from custodian, end of day reconciliation of positions with custodian
data and once a week complete reconciliation of fund accounting
system records with custodian records.
i. The AMC may implement the following depending upon the scale and
complexity of business:
a. Documenting a Fraud Response Plan and reporting of near miss
incidents.
b. Developing Fraud Risk scenarios and updating with changing business
dynamics, documentation thereof being maintained in appropriately
designed and updated Fraud Risk Registers (capturing details such as
past fraud incidents).
c. Using data analytics as a key tool for identifying fraud patterns and
indicators.
d. Conducting a fraud control and reporting' training program.
2.6. Compliance Risk
2.6.1. Failure by the AMC to meet its regulatory obligations or manage changes in
legal statutory and regulatory requirements may result in investigations, fines,
financial forfeiture, or regulatory sanctions and material loss to investors and
the organization.
2.6.2. The mandatory and recommendatory elements for managing compliance risk,
are outlined below:
2.6.2.1. Mandatory Elements
(i) The AMC shall establish and maintain policies as required by applicable
statutes and regulations, including policies to address the following:
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a. Know Your Client (KYC), Anti-Money Laundering (AML) and Combating
the Financing of Terrorism (CFT)
b. Outsourcing
c. Customer Complaints & Investor Grievance – Should inter alia include
details of adherence to SEBI regulations with regard to investor servicing
and complaint resolution, tracking complaint resolution, update of
complaint log and forwarding of complaints and the Management
Information System (MIS) to compliance officer, complaint resolution
process being reviewed by compliance officer. The compliance officer shall
review the complaints with an objective to catch early warning signs for
fraud or any systemic issues.
d. Related Party Transactions.
e. Front running
f. Conflict of Interest.
g. Employee Trading (including issues related to Insider Trading).
h. Code of Conducts.
i. Commission and other sales & marketing costs.
j. Commercial Bribes or Kickbacks.
k. Fraud Risk Management
l. Whistle Blowing
m. Information Security and Data Privacy
n. Gifts and Entertainment
o. Record Retention
p. Dealing Room Policy
q. All disclosure requirements (including derivative transactions, off balance
sheet items and contingent liabilities, etc.).
(ii) There should be defined responsibilities for:
a. Filing of timely and accurate regulatory reports to the Regulator(s) and
Board of AMC and Trustees as prescribed by the applicable laws and
regulations.
b. Pre-use review of AMC’s marketing materials (collateral, brochures etc.),
website uploads, digital advertising and performance advertising etc.
c. Monitoring that all investments and holdings are consistent with
disclosures made to clients and applicable restrictions.
d. Mechanism for prevention or detection of possible insider trading at the
personnel or portfolio levels.
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e. Review for adequacy of disclosures made to the investors regarding
significant risks such as liquidity, counterparty and credit (quality of
investments made mainly debt based on the credit rating), investment,
and other risk areas.
f. Measures to prevent and detect trading violations involving short selling.
g. Maintenance of all required licenses, registrations, approvals and
permissions.
(iii) AMCs should have an Anti-Money Laundering/Combating Financing of
Terrorism (AML/CFT) program with the following attributes:
a. Employees understand obligations and contents of policies to effectively
carry out their AML/CFT responsibilities.
b. Transaction Monitoring is done to identify Suspicious Activities.
c. Suspicious Transactions Reporting is done to the relevant authorities.
d. Adequate training programs to ensure employees are constantly aware of
money laundering/financing of terrorism risks and measures (focus on their
roles and responsibilities).
(iv) AMCs should have systems in place to detect and prevent securities market
violations including securities market frauds and malpractices at their end:
a. A report containing details of the alerts generated and the subsequent
actions taken in this regard should be submitted to trustees on a quarterly
basis.
b. Trustees may forward the results along with their comments and steps
taken, if any, to SEBI in the half-yearly trustee reports.
2.6.2.2. Recommendatory Elements
(i) The following policies may be incorporated by the AMCs depending on
complexity and scale of operations:
a. Political Contributions.
b. Outside business activity policy.
(ii) The AML/CFT program of the AMCs may include the following depending on
the size and scale:
a. Investor awareness programs (literature or pamphlets or such) to educate
clients about the AMC’s AML/CFT obligations.
b. Review of client risk scoring model to ensure effectiveness of the
AML/CFT program.
c. Independent or External review of AML/CFT policies to ensure their
effectiveness.
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2.7. Technology, Information Security and Cyber Risk
2.7.1. Given the huge dependence on technology, any system failure could trigger a
variety of risks, e.g. operational risk, compliance risk. etc. Technology
Operations should support processing and storage of information, such that the
required information is available in a timely, reliable, secure and resilient
manner.
2.7.2. Increasing disclosure requirements on public portals by AMCs required a
focused approach towards data management. Digitalization and online platforms
have given rise to need for effectively mitigating information security and cyber
risks.
Paragraph 5.10, 5.11 & 7.25 of this Master Circular has reference to guidelines
relating to cyber security and cyber resilience framework and audit framework
encompassing systems and processes for Mutual Funds/AMCs. The systems and
processes as specified must be in place and any future guidelines issued by SEBI in
this regard may be suitably followed.
2.8. Reputation and Conduct Risks
2.8.1. The risk of damage to the firm's reputation that could lead to negative publicity,
costly litigation, a decline in the customer base or the exit of key employees
and therefore, directly or indirectly, financial loss or revenue shrinkage.
2.8.2. Conduct risk is often defined as the risk to the delivery of fair customer
outcomes or to market integrity.
2.8.3. The mandatory and recommendatory elements for managing reputation and
conduct risk are outlined below:
2.8.3.1. Mandatory Elements
(i) The management must look into reputation and conduct risks and inculcate
their significance in the AMC culture by,
a. Integrating reputation and conduct risk considerations into strategy setting
and business planning.
b. Establishing a crisis management policy (to minimize or neutralize negative
publicity in the event of any incident or bad conduct by an employee).
c. Establishing monitoring tool(s) for social media grievances, etc.
(ii) The Board of AMC should approve and monitor the effectiveness of
implementation of an enforceable code of ethics and business conduct; in the
event of a material breach in conduct or a significant reputation risk event, the
Board of AMC should be informed.
(iii) The following practices must be adopted by the AMC:
a. While designing or improving the products, the complexity of the product
and consumer behaviours must be considered.
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b. Impact assessment should be undertaken for sales and promotion
expenses (i.e. evaluation of value added v/s cost incurred) using
appropriate techniques, e.g. analysis of complaints, compliance monitoring
program, data analytics, mystery shopping, etc.
c. Preventive measures and monitoring mechanism should be implemented
to mitigate mis-selling risks.
2.8.3.2. Recommendatory Elements
(i) AMCs may consider adopting:
a. Reputation risk policy.
b. Media interaction policy and procedures
c. Assessment and management of reputation via brand management tools,
data analytics, business intelligence.
d. Framework / Process to review and action any negative mention in
traditional or social media.
e. Procedures to monitor reputation risk on an ongoing basis.
(ii) The management may be involved in increasing awareness about conduct risk
within the AMCs by:
a. Conducting training programs for conduct risk awareness.
b. Monitoring conduct risk indicators.
c. Incorporating conduct performance as part of the AMCs’ sales and
marketing team metrics.
2.9. Outsourcing Risk
2.9.1. Inadequate management of outsourced processes lead to errors, frauds,
Inefficiencies, poor quality investor services, breach of fiduciary duties data
pilferages and long term impact on reputation and contractual obligations.
2.9.2. Asset management companies often rely on third parties including Custodians,
Fund Administrators, R&T agents, and various types of outsourced service
providers who perform operational, accounting, recordkeeping and other types
of services. In utilizing the services of such third parties, it is important from a
risk management perspective to keep in mind that asset managers have
ongoing fiduciary obligations to their customers even though they have
delegated certain of their roles to others. It is therefore critical to perform careful
reviews of the capabilities of third parties at inception of relationships and on
an ongoing basis, and to review information provided by third parties for
completeness, balance and accuracy in order to be able to determine whether
such third parties meet the risk management, credit, operational, legal and
other relevant standards of the reviewing company with respect to the function
they are performing.
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2.9.3. The mandatory and recommendatory elements for managing Outsourcing risk,
are outlined below:
2.9.3.1. Mandatory Elements
(i) Risk management with respect to any outsourced activity should be done in
the manner as if the activities were being done in-house.
(ii) There shall be a dedicated person in the AMC who would be responsible for
the outsourced activities of each outsourced vendor.
(iii) The AMC should have a Board approved Outsourcing Policy incorporating the
following aspects (as well as other applicable regulatory requirements):
a. Listing of core activities which cannot be outsourced.
b. Procedure for outsourcing, including risk and materiality assessment.
c. Monitoring and control of outsourced activities (as part of outsourcing risk
management program).
d. Information security and confidentiality (including data privacy/ protection
standards).
e. Criteria for selection and minimum qualification.
f. Minimum quality standards.
g. Tenure of agreement.
h. Responsibility for outsourced functions.
i. Acceptable level of deviations.
j. Periodic review of service levels and pricing.
k. Restriction on sub-delegation or sub-contracting.
l. Right for inspection and audit.
m. Approval authorities.
n. Service level agreement.
o. Archival and retrieval of documents/data.
p. Insurance requirements.
q. Incident reporting and escalation matrix.
(iv) Before outsourcing any activity, the AMC should ensure the following is in
place:
a. Outsourcing agreements with service provider are legal and binding as per
the law.
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b. Due diligence (including AML/CFT, if applicable) is conducted on the
service provider, where the outsourced activity is material, which may
include the following considerations:
1. Availability of qualified and experienced service providers to perform the
service on an ongoing basis
2. Arrangements for structured review of the capability and experience of
service providers
3. Evaluation of relevant personnel for critical functions, to evaluate their
specific competencies and execution capabilities
4. A disaster recovery and business continuity plan exist with regard to the
contracted services and products, and that the adequacy and
effectiveness of the same is maintained and tested periodically by the
service provider.
c. Analysis of the benefits and risks of outsourcing the proposed activity as
well as the service provider risk, and determination of the cost implications
for establishing the outsourcing arrangement.
(v) After outsourcing any activity, the AMC shall ensure:
a. Outsourcing vendors’ process/people/systems are reviewed.
b. A periodic internal review is done on the functioning of outsourced activities
(like Fund Accounting and R&T agent functions) at least annually.
c. An effective structured tool (IT / manual) is used to review/benchmark the
performance of the third party service providers (Fund Administrators /
Custodians / R&T agents) vis-a-vis the SLA.
d. The result of the review documented and risks emanating from them are
highlighted and remediation plans are monitored on an ongoing basis.
e. Communication of its error tolerance, code of conduct and objective to its
third party service providers (Fund Administrators / Custodians / R&T
agents).
f. The service provider should test business continuity and contingency plan
on a periodic basis to ensure adequacy and effectiveness’.
(vi) The Mutual Fund should establish reconciliation procedures with regard to
periodic reconciliation between fund accounting system, R&T system and bank
account and conduct a periodic audit of all investor-related activities, carried
out both by the Mutual Fund and the R&T agent, to ensure that all allotments,
redemptions, income distributions and commission distributions have been
accurate and timely.
(vii) The Mutual Fund should ensure that the fund accounting systems used
(inhouse or by the fund accountant to whom this activity has been outsourced)
facilitate:
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a. Validation of NAV calculations.
b. Automated and manual price feeds.
c. Identification of missing prices.
d. Flagging of price variances beyond pre-established tolerance levels.
2.9.3.2. Recommendatory Elements
(i) To enhance protection over outsourcing risk, AMCs may include the following
as part of their evaluation / monitoring program:
a. Consider fraud vulnerabilities in the outsourced process, including:
1. Detailed periodic fraud risk assessment program
2. Fraud response plan
3. Fraud risk register
4. Reporting to the AMC’s Board
b. Maintain an exit strategy including a pool of comparable service providers,
in the event that a contracted service provider is unable to perform or in
the event of a critical fraud.
2.10. Sales and Distribution Risk
2.10.1. As most AMCs outsource or use other channels for distributing products, such
as banks, IAs, brokers, NBFCs, Distributors, etc., there is a need of monitoring
risks associated with managing distribution channels and processes,
commission pay-outs, brokerage disbursements, sales expenses, etc.
2.10.2. The mandatory and recommendatory elements for managing sales and
distribution risk, are outlined below:
2.10.2.1. Mandatory Elements
(i) The KRA/performance appraisal at the relevant CXO level must capture the
performance in managing the risk of mis-selling. The risk of mis-selling may
incorporate the components like the number of mis-sellings, outcomes in the
inspection report, analysis of the portfolio of investors, analysis based on
assessment of appropriateness to the investors, etc. As an example, a
parameter to gauge mis-selling may be the analysis of whether growth in the
AUM of a scheme is on account of performance or mainly due to higher
commission paid to distributor.
(ii) The AMC shall also be responsible for the mis-selling done by the persons
associated with selling of mutual funds including distributors. The performance
disclosure to investors, if any, by the distributors should be true and fair. It
should not be misleading to the investor by representing any selective time
period representing the favorable return.
(iii) Detailed analysis should be done at the AMC level to verify mis-sellings, if any.
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(iv) All the sales staff and distributers must be NISM certified with the required
qualifications prescribed by SEBI/AMFI.
(v) The AMC must implement the following procedures relating to distributor
commissions:
a. Analytical tools/ audit procedures used to review trends/errors in
brokerage/ commission disbursements.
b. An approved methodology for determining commission structures
applicable to distributors / products, together with an authorization matrix
for approving deviations and reporting cost-benefit outcome.
c. Ensuring that commissions and other payments made to distributors
adhere to AMFI and regulatory requirements.
(vi) Conducting regular performance reviews for distributors.
(vii) Conducting enhanced due diligence of distributors where appropriate (suitable
policy to be incorporated)
2.10.2.2. Recommendatory Elements
(i) Distribution risks can be further monitored by:
a. Monitoring marketing, sales and promotional expenses which includes
the nature of expenses and approval matrix for the expenses.
b. Monitoring and reporting the cost-benefit outcome of the marketing,
marketing, sales and promotional expenses
c. Undertaking mystery shopping.
d. Claw back provisions in the commission structures to provide adequate
protection from continuous services to the investors.
2.11. Financial Reporting Risk
2.11.1. Absence of internal control over financial reporting with regard to the mutual
fund schemes, may pose the following risks:
(i) Improper maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of assets
(ii) Absence of reasonable assurance that transactions are recorded as necessary
to permit calculation of NAV and preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts
and expenditures are being made only in accordance with authorizations of
the management and the Board
(iii) Failure to prevent or timely detect unauthorized acquisition, use, or disposition
of assets that could have a material effect on the NAV and/or financial
statements.
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2.11.2. The mandatory elements for managing financial reporting risk, are outlined
below:
2.11.2.1. Mandatory Elements
(i) The AMC should have detailed accounting policies and procedures for Mutual
Fund accounting.
(ii) Adequate segregation of duties must be created within the Finance (or
relevant) function for Mutual Fund accounting.
(iii) There should be documentation and regular testing of internal controls over
financial reporting of Mutual Fund schemes.
2.12. Legal & Tax Risks
2.12.1. Legal & Tax risk is the risk of loss to an institution which is primarily caused by:
(i) A defective transaction.
(ii) A claim (including a defense to a claim or a counterclaim) being made or some
other event occurring which results in a liability for the institution or other loss
(for example, as a result of the termination of a contract).
(iii) Failing to take appropriate measures to protect assets (for example,
intellectual property) owned by the institution.
(iv) Change in law
(v) Misinterpretation of statutes and regulations.
(vi) Failure to collect or pay appropriate taxes, or submit required returns or
information.
2.12.2. The mandatory elements for managing legal and tax risk, are outlined below:
2.12.2.1. Mandatory Elements
(i) The AMC should have documented processes and defined responsibilities for:
a. Calculation and deposit statutory levies applicable to Mutual Funds.
b. Acceptance of applications from permitted jurisdictions.
c. Monitoring of risks emanating from tax related aspects and their redressal.
d. Implementation of new and amended statutory and regulatory
requirements.
(ii) To mitigate legal risks, the AMC should have documented processes and
defined responsibilities for:
a. Review of material agreements.
b. Authorized personnel for execution and registration of legal agreements
and documents.
c. Centralized register of all legal agreements
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d. Archival of physical and electronic versions of all legal agreements and
documents.
2.13. Talent Risk
2.13.1. Talent risk is the risk of not having the right people in place at the right time to
drive current and future business growth.
2.13.2. The mandatory and recommendatory elements for managing talent risk, are
outlined below:
2.13.2.1. Mandatory Elements
(i) With respect to talent risk, there should be proper succession planning for
identified key positions. At no point of time the AMC is deprived of the services
of any Key Managerial Person.
(ii) The AMC should have adequately documented policies and procedures for:
a. Recruiting staff with appropriate experience, skill levels, and degree of
expertise to undertake specialized business operations., in particular,
those relating to risk management
b. Employing screening procedures, including background checks, for job
applicants, particularly for key positions.
c. Creation of policies for recruiting, retaining and remunerating staff,
especially for key personnel.
d. Evaluation of the candidate's capability and experience to manage the risks
associated with the concerned role is should be a key element of the
recruitment process.
e. Adequate back-ups for key people are present.
2.13.2.2. Recommendatory Elements
(i) AMCs may implement a remuneration policy that prevents excessive risk
taking and also ensures retention of good talent.
(ii) A Remuneration Committee, comprising mainly of non-executive directors
may be established to review and recommend the policy relating to the
remuneration of key management personnel, including the CEO, Fund
Managers, etc.
*****
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ANNEXURE 5: REPORTING FOR ARTIFICIAL INTELLIGENCE (AI) AND
MACHINE LEARNING (ML) APPLICATIONS AND SYSTEMS OFFERED AND
USED BY MUTUAL FUNDS472
Systems deemed to be based on AI and ML technology
Applications and Systems belonging but not limited to following categories or a combination
of these:
1. Natural Language Processing (NLP), sentiment analysis or text mining systems that gather
intelligence from unstructured data. – In this case, Voice to text, text to intelligence systems
in any natural language will be considered in scope. E.g.: robo chat bots, big data
intelligence gathering systems.
2. Neural Networks or a modified form of it. – In this case, any systems that uses a number of
nodes (physical or software simulated nodes) mimicking natural neural networks of any
scale, so as to carry out learning from previous firing of the nodes will be considered in
scope. E.g.: Recurrent Neural networks and Deep learning Neural Networks.
3. Machine learning through supervised, unsupervised learning or a combination of both. – In
this case, any application or systems that carry out knowledge representation to form a
knowledge base of domain, by learning and creating its outputs with real world input data
and deciding future outputs based upon the knowledge base. E.g.: System based on
Decision tree, random forest, K mean, Markov decision process, Gradient boosting
Algorithms.
4. A system that uses statistical heuristics method instead of procedural algorithms or the
system / application applies clustering or categorization algorithms to categorize data
without a predefined set of categories.
5. A system that uses a feedback mechanism to improve its parameters and bases it
subsequent execution steps on these parameters.
6. A system that does knowledge representation and maintains a knowledge base.
*****
472 SEBI Cir No SEBI/HO/IMD/DF5/CIR/P/2019/63 dated May 09, 2019
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ANNEXURE 6: UNIT HOLDER PROTECTION COMMITTEE (UHPC)473
1. Membership / constitution:
a) The Chairperson of the Committee shall be an independent director.
b) The UHPC of AMC shall have minimum three directors as members.
c) At least two-third members of the UHPC shall be independent directors of AMC. If two-third
of the total strength results into fraction, then higher number after rounding up shall be
considered.
d) The members of the UHPC will be appointed by the board of directors of AMC.
e) The UHPC shall invite expert / representative of unit holders as an invitee for matters as it
may deem fit necessary.
2. Meetings:
a) The Chairperson of the UHPC shall call the meeting as and when required. However, at
least four meetings shall be held in a financial year.
b) The quorum for meeting shall either be two members or one third of the members of the
UHPC, whichever is greater, with at least two independent directors.
c) If one-third of the total strength results into fraction, then higher number after rounding up
shall be considered for the quorum.
3. Reporting:
a) The AMC shall present agenda of the UHPC to its members. This shall also include reports
on findings / observations w.r.t matters relating to protection of unit holders’ interest, arising
from audits / reviews etc. undertaken by the AMC, Internal Auditors etc.
b) The UHPC of AMC shall brief board of directors of the AMC on the proceedings of the
meeting. Further, minutes of the meeting of the UHPC shall also be placed before the board
of directors of Trustee Company.
4. Powers and responsibilities
4.1 Unit holder complaints and redressal
a) Review of unit holder complaints and grievances with ageing of outstanding complaints on
a periodical basis
b) Review of complaints / grievances handling mechanism including reported instances of mis-
selling and frauds, if any. Analyse the root cause of investor complaints, identify market
473 SEBI Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2023/117 dated July 07, 2023
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conduct, issues and advise the management appropriately about rectifying systemic issues, if
any.
c) Review measures and steps taken to reduce unit holder complaints
4.2 Investor education and awareness
a) Recommendation of policy on utilisation of investor education and awareness funds
b) Review of various investor education and awareness steps taken by the AMC including
effective utilisation of investor education and awareness funds on periodic basis
4.3 Regulatory and other functions
a) Ensure that the AMC adopts a standard operating procedure for its processes including
timeframe for processing and confirmation of financial and non-financial transactions, treats
unit holders fairly and equally and there is no preferential treatment given to different classes
of investors.
b) Ensure compliances with applicable laws with respect to resolving, reporting and
disclosures of complaints and grievances
c) Review of inactive folios474, unclaimed amounts of dividend and redemptions and measures
taken by AMC to reduce the quantum of such unclaimed amounts.
d) Review of measures taken by AMC for exit options, voting and obtaining consents as
prescribed under the MF Regulations.
e) Review of transfer, transmission, and nomination process.
f) Review of adherence to service standards adopted with respected to various services
adopted by the AMC being rendered by the RTA.
g) Review of measures taken for ensuring timely receipt of dividend and redemption proceeds,
annual reports, and other regulatory communications/disclosures.
h) Ensure timeliness and adequacy of disclosures of material information to the investors.
i) Review other activities carried out by the AMC (under Regulation 21(b)) and its impact on
the unit holders of Mutual Fund.
j) Ensure that all conflicts are adequately managed and/or disclosed as per the conflict-of-
interest policy.
k) Review of all investors/scheme compensation to ensure they are fair and appropriate.
l) Review instances of market abuse by employees of AMC.
474 SEBI Circular No. SEBI/HO/IMD/IMD-SEC-3/P/CIR/2025/15 dated February 12, 2025
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4.4 Review of Unitholder Protection (UP) metrics
a) Ensure that the AMC has approved internal policy for measurement of various parameters
(such as cases of investor compensation, investor complaints, fraud incidents impacting any
investor/ scheme, consistent underperformance of any scheme, number of incidents where
the agreed Turn Around Time (TAT) has exceeded with respect to investor related
transactions such as redemptions/ redressal of investor complaints/ non-financial
transactions, etc., system issues/ incidents/ BCP events impacting investors, data privacy /
cyber security incidents impacting investors) through appropriate UP metrics. The UP metrics
should be approved by the Committee, along with the targeted level / benchmark for each
parameter, where possible.
b) Put in place a mechanism for reporting of the UP metrics to the Committee.
c) Review the reports generated with respect to the UP metrics at least once in a half year.
*****
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ANNEXURE 7: SYSTEM AUDIT475
Annexure 7A - System Audit framework for MFs/AMCs
IT Environment
Organization Details
Name
Address
What is the IT team size
(Employees)?
What is the IT team size
(Vendors)?
IT Setup & Usage
Data Center and DR Site
(Location,
owned/outsourced)
Network Diagram
(schematic) with WAN
connectivity
Network/ Security
Systems: (Please specify
Version/make/model)
- Routers
- Switches
- Proxy servers
- Firewall
- Intrusion Detection
Systems
475 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2019/57 dated April 11, 2019
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- Intrusion Prevention
Systems
- Remote Access Servers
- Data Leakage Prevention
(specify network and/ or
host)
- Privileged Identity
Management
- Others (please specify
e.g. WIPS)
Total number of
workstations (incl. laptops)
& users
Primary Operating
Systems in use for
workstations?
Application Systems
Application System Location HW/OS/DB HW/OS/DB HW/OS/DB
of for DB Server for Web for Web
server(s) Server Server
e.g. Front Office System
e.g. Back Office System
e.g. Email System
e.g. Intranet System
e.g. File Server System
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e.g. Finance & Accounting
System
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Annexure 7B - System Audit Program Checklist
The checklist is intended to provide guidance to the Mutual Funds/Asset Management
(MFs/AMCs) Companies and Firms/ Companies appointed by MFs/AMCs for performing
the systems audit. MFs/AMCs are responsible for ensuring that adequate and effective
control environment exists over the IT systems in use for supporting business operations,
including that at vendors/ third parties supporting operations like Register & Transfer Agents
(RTAs), Fund Accountants, Custodians etc.
Audit Audit Objective Sub-Heading Audit Checklist
Objective Heading
Question
No
1 IT IT GOVERNANCE
GOVERNANCE
1a IT IT Governance IT Governance framework:
GOVERNANCE Framework Whether an IT Governance framework
exists which requires defining of:
- An IT Organization Structure
- Frameworks used for IT governance
- Organization wide IT governance
processes including policy making,
implementation and monitoring to
ensure that the governance principles
are followed as desired
1b IT IT Strategy IT Strategy Committee:
GOVERNANCE Committee - Whether an IT Strategy Committee
exists with representations from Board
of Directors (BOD), senior IT and
business management and reporting to
the BOD?
- Is the IT strategy committee has
members with skills and understanding
of processes, information technology
and information security in the context of
Mutual Fund and other business of the
organization?
- Are roles and responsibilities of the IT
Strategy Committee defined?
- Does the IT Strategy Committee meet
at least twice in a year?
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1c IT IT Risk IT Risk Management:
GOVERNANCE Management - Whether organization has a defined IT
risk management framework covering
amongst others process and
responsibilities of risk assessment,
management and monitoring?
- Does the risk management framework
include the following:
a. Identification of IT assets subject to
risk management
b. Identification of threats related to
those IT assets
c. Assessment of probability of
occurrence of threats
d. Defining risk mitigation methods in
line with threats, risk categorization and
probability
e. Process to be followed for monitoring
of risks identified and mitigation
methods implemented
- Is the IT risk management framework
approved by the BOD?
- Has the organization established risk
management committee that oversee
and provide direction with respect to IT
risk?
1d IT IT Policies and IT Policies and Procedures:
GOVERNANCE Procedures: - Whether a defined and documented IT
policy exists and is approved by the
BOD?
- Is the current state of IT architecture
documented including infrastructure,
network and application components to
show system linkages and
dependencies?
- Whether defined and documented
procedures exist for all components,
which amongst others include:
a. IT Assets Acquisition (including
retrial)
b. Logical access management
c. Change management
d. Backup and recovery
e. Automated batch jobs
f. Incident management
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g. Problem management
h. Data Center Operations
i. Operating systems and database
management
j. Network and communication
management
k. End user computing
l. Acceptable use of IT assets, etc.
- Does IT policy comprise of the IT
organization structure, roles and
responsibilities of key IT management
personnel, IT strategic management
process and processes for ensuring
adherence with compliance
requirements?
1e IT IT Organization IT Organization Structure:
GOVERNANCE Structure - Whether a defined organization
structure exists with defined authorities,
reporting lines and responsibilities
related to IT governance including a
designated Chief Information Officer
(CIO)/ Chief Technology Officer (CTO),
Chief Information Security Officer
(CISO) and heads for key IT teams
managing IT operations, IT applications,
IT infrastructure, IT risk management/
reviews?
- Are roles and responsibilities of IT
Organization defined?
1f IT IS Audit Information Systems (IS) Audit:
GOVERNANCE - Is there a defined IS audit framework
including process and responsibilities to
be followed for IS audits, IS audit
calendar, scope definition, review,
reporting process and monitoring
progress against non-compliances?
- Are IS audit plans, reports, findings and
action plans reported management and
audit committee of board as
appropriate?
2 INFORMATION INFORMATION SECURITY
SECURITY
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2a INFORMATION Information Information Security function:
SECURITY Security - Whether an information security
function function exists distinct from IT function
with dedicated responsibility of defining
and monitoring implementation of
information security policies and
controls?
- Is there a designated CISO responsible
for overseeing the information security
function and for ensuring information
security procedures are defined and
implemented?
- Does the information security function
include representations from
departments and operations across the
organization including internal and client
facing functions and including all
organization locations?
2b INFORMATION Information Information Security policy:
SECURITY Security policy - Whether a defined and documented
information security policy exists and is
approved by the BOD?
- Whether the information security
framework ensures security
requirements are in-built into key IT
architecture, operations and other non-
IT aspects, including but not limited to:
a. Access management - Physical and
Logical
b. Infrastructure and applications
change management
c. Backup and recovery
d. automated batch jobs
e. Incident management (including
security incidents)
f. Problem management
g. Data center Operations
h. Operating systems and database
management
i. Network and communication
management
j. End user computing, in addition
consider phone, faxes, photocopiers,
scanners, etc.
k. Security Operations - logging and
monitoring
- Whether defined and documented
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procedures exist for the following:
a. Hardening procedures, standards and
guidelines for operating systems,
databases, servers and network devices
b. Use of cryptography
c. Third Party Security
d. Human Resource controls for
information security
e. Information classification guidance
and process including mechanisms for
storage, transmission and disposal of
information
- Whether the information security
framework/ policy is reviewed on an
yearly basis at a minimum?
2c INFORMATION Information Information Security Risk
SECURITY Security Risk Management:
Management - Whether a defined process exists and
is followed for Information Security (IS)
risk management on an annual basis, at
a minimum?
- Whether the IS risk management is
performed in line with the organization
and IT risk management framework?
- Whether the risk assessment is
performed for new functions, processes,
teams and locations. Whether relevant
risk mitigation and monitoring actions
are implemented as per the defined
framework?
2d INFORMATION Cyber Security Cyber Security:
SECURITY
- Whether Mutual Funds / AMCs has
complied with the provisions of Cyber
Security and Cyber Resilience
prescribed under Paragraph 5.10 of this
Master Circular and any further
guidelines by SEBI with regard to cyber
security for MFs / AMCs?
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2e INFORMATION Information Information Security Awareness:
SECURITY Security - Whether information security and
Awareness cybersecurity processes are
communicated to employees,
contractors, third parties, etc.?
- Whether information security and
cybersecurity trainings are conducted as
part of induction as well as periodic
trainings?
2f INFORMATION Information Information Privacy:
SECURITY Privacy - Whether defined and documented
privacy policy exists and is approved by
the BOD?
- Whether procedures have been
defined in line with applicable
regulations with respect to:
a. Privacy notice
b. Choice & consent
c. Data collection
d. Data use, retention & disposal
e. Access to data
f. Disclosure to third parties
g. Security controls for private data
h. Monitoring & enforcement
2g INFORMATION Human Human Resource Controls:
SECURITY Resource - Whether policies and procedures have
Controls been implemented to address HR
controls as part of information security?
- Whether hiring policies are defined in
line with IT operations and information
security requirements?
- Whether induction trainings are
conducted for all new joiners?
- Whether all new joiners are required to
confirm and accept the organization's
policies and procedures with respect to
information technology, information
security and cybersecurity?
- Whether background check
procedures are performed for all new
joiners?
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2h INFORMATION Digital Digital Technologies:
SECURITY Technologies - Whether the organization has a defined
process to identify, develop and
implement digital technologies
supporting internal and external facing
functions?
- Whether all digital technologies
including mobile applications, web-
based portals, mobile websites, cloud
storage, etc. are implemented only after
performing risk assessment, testing and
where required independent reviews?
- Whether the organization has a defined
and approved social media usage policy
to address information security and
reputational risks arising out of the
same?
2i INFORMATION Third Party Third Party Security:
SECURITY Security - Whether the organization has a defined
vendor management framework and is
approved by the BOD?
- Whether the vendor management
framework includes processes to be
followed for vendor due diligence,
selection, risk assessment, onboarding,
contracting and monitoring?
- Whether vendors are on boarded only
after performing a technical due
diligence, risk assessment and
background checks?
- Whether formal contracts are signed
with vendors and include the following at
a minimum:
a. Services provided
b. Processes to be followed
c. Service Level Agreements and related
penalty clauses, if any
d. Confidentiality, service continuity and
data privacy clauses
e. Performance monitoring processes
and reports to be provided
f. Escalation procedures
g. Right to access and audit
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2j INFORMATION Information Information Security Compliance:
SECURITY Security - Has the organization implemented
Compliance procedures to assess compliance
against defined information security
procedures in the form of periodic
assessments/ reviews?
- Are critical functions within the
organization subject to stringent security
reviews by internal teams or external
agencies, where necessary?
- Are IS review reports, findings and
action plans reported to IT/IS risk
committees, IT Strategy Committee of
BOD as appropriate?
3 ACCESS ACCESS MANAGEMENT
MANAGEMENT
3a ACCESS Access Policies Access Policies and procedures:
MANAGEMENT and procedures - Whether defined and documented
policies and procedures exist for
managing access to applications and
infrastructure (including network,
operating systems and database) and
are approved by relevant authority?
- Whether the defined procedures
include responsibilities and process to
be followed for:
a. Access grant and modification
including definition of authorization
matrix as per system
b. Access revocation procedures
including notification as well as
timeliness of revocation
c. Access rights and Roles review
procedures for all systems
d. Privileged access to systems
e. Review of access logs for privileged
users
f. Segregation of Duties (SOD)
- Whether appropriate risk acceptance is
taken 0in the event entire approved
procedures ca0nnot be implemented
due to system limitations? In such
cases, whether alternate risk mitigation
measures are implemented?
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3b ACCESS Privileged Privileged access:
MANAGEMENT access - Whether privileged access to systems
is available to limited authorized
personnel?
- Whether privileged access to systems
is subject to more stringent security
controls (such as Privileged Identity
Management Solutions, more stringent
password parameters, etc.) as
compared to normal users?
- Whether access rights for privileged
users are monitored on periodic basis?
- Whether logs of privileged users are
stored and reviewed on a periodic basis
based on criticality of systems?
3c ACCESS Access Access Administration:
MANAGEMENT Administration - Whether role-based and least privilege
access mechanisms are in-built into
systems to enable authorized access as
per job roles?
- Whether access administration
requests, related approvals/ notifications
and related actions (creations,
revocation and modification) are logged
and documented using automated tools
with date-time stamps and appropriate
evidences are retained as per defined
procedures for review and audit
purpose?
- Whether creation and modification of
access to systems requires a formal
approval based on a defined
authorization matrix?
- Whether access revocation
notifications are sent on a timely basis?
- Whether access is revoked on a timely
basis on the last working date of the
user?
- Whether sufficient monitoring
mechanisms have been implemented to
ensure all access administration
requests are addressed as per
procedures?
- Whether users are provided with
unique user identifier as per
organizations naming conventions?
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3d ACCESS Access Access Authentication:
MANAGEMENT Authentication - Whether appropriate authentication
mechanisms are used for access to
systems including use of passwords,
One Time Passwords (OTP), Single
Sign on, etc.?
- Following password parameters should
be defined [In brackets some prevalent
practices are shared]:
a. Minimum length (e.g. 8 characters)
b. Complexity (combination of alphabets
(upper case and lower case)/ numbers/
symbols.)
c. Maximum Age (e.g. 90 days)
d. History (e.g. 3)
e. Account lockout threshold (e.g. 3 or 5
attempts)
- Whether defined procedures require
usage of unique user IDs for each
individual?
- Whether usage of generic IDs and
default IDs is prohibited unless
necessary and with risk acceptance
sign-off?
In such cases ownership and
accountability for usage of generic IDs
should be documented.
-Whether the system allows for
automatic session logout after a system
defined period of inactivity?
3e ACCESS Access Review Access Review and Monitoring:
MANAGEMENT and Monitoring - Whether access rights to systems are
reviewed on a periodic basis based on
criticality of systems?
- Whether access logs of users having
access to critical activities are
monitored?
- Whether rule based automated or
manual alerts are implemented for
unauthorized access or activities,
whether such alerts are monitored and
addressed on a timely basis?
- Whether audit trails of critical activities
including key business transactions,
modification of security parameters,
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masters' updates, and access
administration activities are available
with details around related user IDs,
approvers and date-time stamps.
Whether audit trails are retained for
evidence, review and audit purposes?
- Whether control mechanisms such as
periodic reconciliation of user lists with
HR lists, deactivation of users with no
logins for a defined timeframe, etc. have
been deployed to ensure any
unauthorized access is timely
terminated?
3f ACCESS Segregation of Segregation of Duties (SOD):
MANAGEMENT Duties (SOD) - Whether a defined and documented
SOD matrix exists describing key roles
within the systems and conflicting
rights?
- Whether access approvals, creations
and modifications are performed based
on approved SOD matrix?
- Potential SOD conflicts are
investigated during periodic access
reviews and corrective actions are
taken, if any.
3g ACCESS Physical Physical Access Administration:
MANAGEMENT Access - Whether defined and documented
Administration procedures exist for managing physical
access to data center and processing
facilities?
- Whether creation of physical access
requires documentation of appropriate
approvals as per authorization matrix?
- Whether revocation of physical access
is performed on a timely basis on the last
working day of the user?
- Whether physical access
administration requests, related
approvals/ notifications and related
actions (creations and modification) are
logged and documented using
automated tools with date-time stamps
and appropriate evidences are retained
as per defined procedures for review
and audit purpose?
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- Whether access to restricted areas is
reviewed at least once a year?
- Whether physical access logs are
available and retained for investigation
purpose as per guidelines?
- Whether physical access related
incidents and invalid access attempts
are monitored on a periodic basis?
3h ACCESS Physical Physical Security:
MANAGEMENT Security - Whether appropriate physical security
mechanisms have been deployed
including guarding entrance, usage of
access control system, door alarms,
turnstiles, biometric access, etc.?
- Whether appropriate visitor access
controls have been implemented
including logging of visitor access
including equipment carried, visitor
escorting, issue and reconciliation of
visitor badges, etc.?
- Whether Closed Circuit Tele Vision
(CCTV) has been installed in restricted
areas for monitoring, and logs for the
same are retained for investigation
purpose?
- Whether appropriate environmental
security measures such as fire alarms,
smoke detectors, water detectors, Air-
conditioners, etc. have been
implemented. Whether environmental
controls are monitored on a periodic
basis. Are environmental security
devices maintained at regular intervals
as prescribed by the vendor?
4 CHANGE CHANGE MANAGEMENT
MANAGEMENT
4a CHANGE Change Change Management Policies and
MANAGEMENT Management Procedures:
Policies and - Whether organization has established
Procedures formalized change management policy
and procedures that define processes to
be followed for changes made to all
systems including applications and
infrastructure (networks, operating
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systems, databases, etc.) including
emergency and configuration changes,
capturing the version history and
approval history?
- Whether appropriate guidance is
available for categorization and
prioritization of changes?
4b CHANGE Change Change Administration:
MANAGEMENT Administration - Whether changes to applications and
infrastructure (networks, operating
systems and databases), including
requests to third party service providers
are approved and authorized by both
authorized IT and business
management personnel, as per defined
authorization matrix?
- Whether for each change, a risk
evaluation process is carried out and
results of the same are approved by
authorized personnel?
-Whether test cases library is
maintained and updated to enable
comprehensive testing?
- Whether changes for relevant
applications, including infrastructure
changes are tested and documented
during User Acceptance testing (UAT).
Whether there is a formal signoff of the
UAT results provided by the business
prior to implementation?
- Whether changes for applications,
including infrastructure (OS/DB)
changes are tested and documented
during system, unit, and regression
testing, where applicable. Whether there
is a formal signoff of the test results by
the technology team prior to UAT
performed by business?
- Whether the procedures require sign-
off from information security team for
ensuring that security controls have
been in-built into the systems?
- Whether a post implementation review
is performed and recorded for each
change migrated to production
environment?
- Whether there exists a procedure to log
emergency changes made to relevant
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applications and underlying
infrastructure, which are authorized by
business and IT management within
defined time frame of being migrated to
production environment?
- Whether new systems or modules
including major changes are subject to
application security testing before
deployment?
- Whether software development is
performed based on industry accepted
coding standards?
4c CHANGE Segregation of Segregation of Duties (SOD),
MANAGEMENT Duties (SOD), environments and version control:
environments - Whether there exists a segregation of
and version production, development and test
control environments?
- Whether the organization has
implemented a change management
versioning tool to maintain audit trails for
all types of changes including
applications, databases, operating
systems and networks?
- Whether implemented changes are
reviewed on a periodic basis and
inappropriate or unauthorized activities
are investigated and communicated to
respective individuals?
- Whether a formal process exists for
granting user access to migrate changes
to the production environment for
relevant applications based upon
approval by authorized personnel?
- In case of any new system or module
implementation, whether adequate
procedures were performed to ensure
accurate and complete transfer of data?
5 INCIDENT INCIDENT MANAGEMENT
MANAGEMENT
5a INCIDENT Incident Incident Management Policies and
MANAGEMENT Management Procedures:
Policies and - Whether management has established
Procedures formalized incident management policy
and procedures that define processes to
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be followed for incidents related to all
systems including applications and
infrastructure (networks, operating
systems, databases, etc.) capturing the
version history and approval history?
- Whether appropriate guidance is
available for categorization and
prioritization of incidents?
5b INCIDENT Incident Incident Resolution:
MANAGEMENT Resolution - Whether incidents are logged using
automated tools with a unique ID
assigned to each incident?
- Whether incidents are classified based
on their severity and urgency. Whether
severity of incidents can be changed
only by authorized personnel?
- Whether a root cause analysis is
performed for each incident and
documented?
- Whether a known error database is
maintained for resolution and
workaround details for similar incidents?
- Whether details of resolution provided
against each incident is documented
against the ticket logged?
- Whether incidents are tracked and
monitored for resolution on a timely
basis?
- Whether recurring incidents are
identified and logged as problems?
5c INCIDENT Service Level Service Level Agreements (SLAs):
MANAGEMENT Agreements - Whether formal SLAs have been
(SLAs) defined for each incident type and
agreed with business and the incident
management team?
- Whether SLAs are tracked using
automated tools to identify timely
escalation to be performed?
- Whether escalation matrix has been
defined and configured using automated
tools?
- Whether SLA monitoring reports are
generated and sent to senior
management on periodic basis and
relevant actions are taken?
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5d INCIDENT Security Security Incident Management:
MANAGEMENT Incident - Whether management has defined and
Management documented procedures for identifying
security related incidents by monitoring
logs generated by various IT assets
such as Operating Systems, Databases,
Network Devices, etc.?
- Whether security incidents / events are
detected, classified, investigated and
resolved in a timely manner?
- Whether periodic reports are published
for various identified Security incidents?
Whether the logging facilities and log
information are protected from
tampering and unauthorized access?
- Whether security incidents are
reported to SEBI in the prescribed
format within stipulated timelines?
6 BACKUP & BACKUP & RECOVERY
RECOVERY
6a BACKUP & Backup Backup Administration:
RECOVERY Administration - Whether documented policies and
procedures exist for backup scheduling,
implementation and monitoring
capturing version history and approval
history?
- Whether regular/ periodic back up of
relevant data and programs is taken as
per the approved backup policies and
frequency [e.g., daily, weekly, etc.]
configured via backup tool?
- Whether access to backup tools is
restricted to authorized personnel?
- Whether modifications to backup
schedule are performed through the
formal change management process?
- Whether appropriate data is backed up
including at a minimum database
records, audit trails, reports, user activity
logs, transaction history, alert logs, etc.?
- Whether execution of backups are
monitored for successful completion and
failures are investigated and closed?
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6b BACKUP & Backup Storage Backup Storage:
RECOVERY - Whether backup tapes are stored
onsite in a secure fireproof storage?
- Whether access to onsite backups are
limited to authorized personnel?
- Whether backup tapes are sent for
offsite storage on a periodic basis?
- Whether offsite storage of tapes is
monitored on a periodic basis?
6c BACKUP & Restoration Restoration:
RECOVERY - Whether restoration testing is
performed on a periodic basis and
issues, if any are resolved?
- Whether request based restorations
are performed only after obtaining
approvals from business head?
7 JOB JOB PROCESSING
PROCESSING
7a JOB Job Processing Job Processing:
PROCESSING - Whether documented policies and
procedures exist for automated job
scheduling, implementation and
monitoring capturing version history and
approval history?
- Whether automated jobs are
processed as per the approved policies
and frequency [e.g., daily, weekly, etc.]
and configured via automated tool?
- Whether access to job processing tools
is restricted to authorized personnel?
- Whether modifications to job schedules
are performed through the formal
change management process?
- Whether execution of automated jobs
are monitored for successful completion
and failures are investigated and
closed?
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8 BUSINESS BUSINESS CONTINUITY PLANNING
CONTINUITY (BCP) & DISASTER RECOVERY
PLANNING
(BCP) &
DISASTER
RECOVERY
(DR)
8a BUSINESS BCP BCP Organization:
CONTINUITY Organization - Whether the organization has a BCP
PLANNING Committee that provides oversight on
(BCP) & BCP planning and functioning in the
DISASTER organization?
RECOVERY - Whether the organization has a
(DR) dedicated BCP Head or Coordinator
overall responsible for development of
the enterprise BCP framework in
conjunction with internal and external
facing functions within the organization
through a defined process?
- Whether the organization has a
dedicated BCP Team or Crisis
Management team to execute the BCP
plan, when required. Does the BCP
team have representations from various
functions and locations of the
organization?
- Whether roles and responsibilities of all
members of the BCP organization are
defined and documented?
8b BUSINESS BCP BCP Methodology and Plan:
CONTINUITY Methodology - Whether the organization has a defined
PLANNING and Plan and documented BCP methodology
(BCP) & which is approved by the BOD?
DISASTER - Whether the BCP methodology
RECOVERY includes a process wise approach for
(DR) development and maintenance of the
BCP framework including Business
Impact Analysis (BIA), Risk Assessment
(RA), BCP Strategy, and BCP Plan?
- Whether a documented BCP plan
exists and is approved by the BOD?
- Whether the BCP is developed based
on the approved methodology and
includes at a minimum the following:
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a. Organization's strategy for BCP
b. Inputs from BIA and RA conducted
c. BCP / DR procedures
d. Conditions for activating plans
e. BCP Team and responsibilities
f. Maintenance schedules
g. Awareness and education activities
h. Resumption procedures
i. Responsibilities of employees
j. Emergency and fall back procedures
8c BUSINESS BCP Plan BCP Plan:
CONTINUITY - Whether a BIA is conducted including
PLANNING identification of critical processes within
(BCP) & the organization and their dependencies
DISASTER on other processes, vendor
RECOVERY dependencies and resources. Whether
(DR) Recovery Time Objective (RTO) and
Recovery Point Objective (RPO) has
been calculated as part of the BIA.
Whether the BIA is approved by the
business, technology and risk teams?
- Whether a Risk Assessment is
conducted for all critical processes
identified in the BIA including
identification of risks and threats and
their impact, probability and priority.
Whether the RA is conducted across
parameters including people, processes
and technology. Has the organization
identified and implemented appropriate
procedures and systems for risk
mitigation?
- Whether a documented BCP plan
exists and is approved by the BOD.
Whether the BCP is developed based on
the approved methodology and includes
at a minimum the following:
a. Organization's strategy for BCP
b. Inputs from BIA and RA conducted
c. BCP / DR procedures
d. Conditions for activating plans
e. BCP Team and responsibilities
f. Maintenance schedules
g. Awareness and education activities
h. Resumption procedures
i. Responsibilities of employees
j. Emergency and fall back procedures
k. Procedures to be followed in the event
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of natural calamities and disasters that
have a wide area or long term impact
8d BUSINESS BCP/ DR testing BCP/ DR testing:
CONTINUITY - Whether the BCP/ DR plan is reviewed
PLANNING on an yearly basis or in case of a major
(BCP) & change in business or infrastructure?
DISASTER - Whether the defined BCP/ DR plan is
RECOVERY tested through appropriate strategies
(DR) including table-top reviews, simulations,
DR drills, alternate site recovery testing,
system recovery, etc. involving all
aspects of people, process and
technology?
8e BUSINESS BCP/ DR BCP/ DR Communication and
CONTINUITY Communication training:
PLANNING and training - Whether the organization has
(BCP) & established appropriate procedures for
DISASTER BCP training and update for the BCP
RECOVERY team?
(DR) - Whether the BCP plan is
communicated to all users internal as
well as external with detailed description
of roles, responsibilities and
dependencies?
8f BUSINESS DR Plan DR Plan:
CONTINUITY - Whether the organization has
PLANNING documented a DR plan including
(BCP) & recovery procedures to be followed in
DISASTER the event of disasters?
RECOVERY - Has the organization identified and
(DR) implemented a DR Site which is a replica
of the production site? Has the
organization implemented procedures
for maintaining the DR readiness and
support infrastructure to be relied upon
in the event of a disaster? Have
redundancies been built into systems
and processes?
- Are relevant system architecture
documents prepared and approved
representing infrastructure, hardware
and software components at the primary
and DR sites?
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9 BUSINESS BUSINESS CONTROLS
CONTROLS
9a BUSINESS Master Controls Master Controls (Investment
CONTROLS (Investment management, Front Office, Middle
management, Office, Back Office, Fund Accounting
Front Office, and Registrar & Transfer Agent):
Middle Office, - Whether new schemes/ funds are
Back Office, created in the system through an
Fund automated maker checker mechanism
Accounting, and based on the Scheme Information
Registrar & Documentation (SID) and information
Transfer Agent) received from authorized sources?
- Whether new customer accounts are
created and assigned schemes/ funds
based on the agreement signed with the
customers?
- Whether access to create/ update/
delete any master data (Customer/
Scheme/ Securities/ Broker/
Subscriptions/ Redemptions etc.) is
restricted only to the authorized
individuals?
- Whether changes to masters are
performed through an automated maker
checker mechanism?
- Whether system has the capability to
capture audit trails/ logs of all changes,
updation, and activities performed?
- Whether update of security prices is
controlled and is updated only from
authorized automated/ manual sources?
9b BUSINESS Front Office Front Office and Back Office
CONTROLS and Back Office Operations:
Operations - Whether appropriate segregation of
duties is maintained between users
having access to front office and back
office system?
- Whether controls exist over data
integrity and accuracy on integration
between the front office and back office
system?
- Whether system does not allow
cancellation of deal order once the deal
is confirmed in the system?
- Whether trade settlement process is
performed by authorized personnel
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through an automated maker checker
mechanism?
- Whether system allocates trades to the
schemes as per defined policy?
9c BUSINESS Risk Risk Management (Middle Office):
CONTROLS Management - Whether a documented risk
(Middle Office) management policy exists defining deal,
counterparty wise limits, securities, etc.
and the same is approved by the BOD?
- Whether hard limits (beyond which
system does not allow booking) and soft
limits (for which system provides
warnings) have been configured in the
system in line with the risk management
policy?
- Whether there are controls defined to
monitor and generate alerts/ reports in
case of breach of predefined SEBI and
Compliance limits defined at scheme/
fund level?
- Whether system monitors the
adherence to predefined rights/ limits
assigned to Fund Manager at scheme/
fund level?
- Whether systemic checks are
performed for prohibiting blacklisted
securities if entered by Dealers for
Trades?
- Whether the system monitors
adherence to broker limits defined?
- Whether appropriate field level
validations and mandatory checks are
built in the system to identify and
appropriate expenses to individual
schemes?
- Whether the system monitors
adherence to guidelines specified in the
Eighth Schedule of the MF Regulations
with respect to accounting policies?
- Whether the system monitors
adherence to policies related to
documentation of rationale for valuation
including inter-scheme transfers?
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9d BUSINESS Investor Investor Servicing (Registrar &
CONTROLS Servicing Transfer Agent):
(Registrar & - Whether automated maker checker
Transfer Agent) controls have been implemented for
processing subscription and redemption
requests?
- Whether appropriate field level
validations and mandatory checks are
built in the system during subscription
and redemption?
- Whether the system has the capability
to maintain the record of all types of
transactions executed on behalf of the
investor for specific scheme/
investment?
- Whether the system has appropriate
controls on brokerage computation and
payouts?
9e BUSINESS Fund Fund Accounting:
CONTROLS Accounting - Whether NAV calculations, if
automated are accurately calculated?
- Whether end of day reconciliations
(cash recon, portfolio recon, pricing
recon, etc.) are performed to ensure no
deals are missed from reporting to the
fund accountant for processing and
complete data is processed for
safekeeping?
- Whether details of the expenses
accrued by the client (Management
fees, audit etc.) are updated
appropriately and accurately and maker-
checker control exists?
- Whether income related transactions
are updated in the system appropriately
and accurately?
- Whether corporate actions are applied
accurately and completely?
- Whether NAV is accurately computed
by Fund Accountant and the same is
released to client, press, R&TA AMFI
appropriately?
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9f BUSINESS Reporting Reporting:
CONTROLS - Does the organization have list of
regulatory and standard operational
reports?
- Has organization implemented
reasonable controls over report
generation with respect to accuracy and
completeness?
9g BUSINESS Custody of Custody of mutual fund scheme
CONTROLS mutual fund assets (Custodian):
scheme assets - Whether automated maker checker
(Custodian) controls have been implemented for
processing of receipt and delivery of
securities, collection of income,
distribution of dividends and
segregation of assets between schemes
and settlements between schemes?
-Whether appropriate field level
validations and mandatory checks are
built in the system for receipt and
delivery of securities, collection of
income, distribution of dividends and
segregation of assets between schemes
and settlements between schemes?
- Whether the system has the capability
to maintain the record of all types of
transactions executed on behalf of the
client for specific scheme/ investment?
- Whether end of day reconciliations
(cash recon, portfolio recon, pricing
recon, etc.) are performed to ensure
whether all securities have been gone to
the correct schemes in time?
- Whether the system monitors
adherence to controls related to
significant accounting and valuation
policies?
- Whether the system monitors
adherence to compliance with SEBI
guidelines and PMLA guidelines?
*****
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ANNEXURE 8: STEWARDSHIP CODE FOR ALL MUTUAL FUNDS IN RELATION
TO THEIR INVESTMENT IN LISTED EQUITIES476
 Principle 1
Institutional Investors should formulate a comprehensive policy on the discharge of their
stewardship responsibilities, publicly disclose it, review and update it periodically.
Guidance
Stewardship responsibilities include monitoring and actively engaging with investee companies
on various matters including performance (operational, financial, etc.), strategy, corporate
governance (including board structure, remuneration, etc.), material environmental, social, and
governance (ESG) opportunities or risks, capital structure, etc. Such engagement may be
through detailed discussions with management, interaction with investee company boards,
voting in board or shareholders meetings, etc.
Every institutional investor should formulate a comprehensive policy on how it intends to fulfill
the aforesaid stewardship responsibilities and disclose it publicly. In case any of the activities
are outsourced, the policy should provide for the mechanism to ensure that in such cases,
stewardship responsibilities are exercised properly and diligently.
The policy should be reviewed and updated periodically and the updated policy should be
publicly disclosed on the entity's website. A training policy for personnel involved on
implementation of the principles is crucial and may form a part of the policy.
 Principle 2
Institutional investors should have a clear policy on how they manage conflicts of interest in
fulfilling their stewardship responsibilities and publicly disclose it.
Guidance
As a part of the aforesaid comprehensive policy, institutional investors should formulate a
detailed policy for identifying and managing conflicts of interest. The policy shall be intended to
ensure that the interest of the client/beneficiary is placed before the interest of the entity. The
policy should also address how matters are handled when the interests of clients or
beneficiaries diverge from each other.
The conflict of interest policy formulated shall, among other aspects, address the following:
1. Identifying possible situations where conflict of interest may arise. E.g. in case of investee
companies being associates of the entity.
2. Procedures put in place by the entity in case such conflict of interest situations arise which
may, inter alia, include:
a. Blanket bans on investments in certain cases
b. Having a ‘Conflict of Interest’ Committee to which such matters may be referred to.
476 SEBI Circular no. CIR/CFD/CMD1/ 168 /2019 dated December 24, 2019
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c. Clear segregation of voting function and client relations/ sales functions.
d. Policy for persons to recuse from decision making in case of the person having any
actual/ potential conflict of interest in the transaction.
e. Maintenance of records of minutes of decisions taken to address such conflicts.
3. Periodical review and update of such policy and public disclosure.
 Principle 3
Institutional investors should monitor their investee companies.
Guidance
As a part of the aforesaid comprehensive policy, institutional investors should have a policy on
continuous monitoring of their investee companies in respect of all aspects they consider
important which shall include performance of the companies, corporate governance, strategy,
risks etc.
The investors should identify the levels of monitoring for different investee companies, areas
for monitoring, mechanism for monitoring etc. The investors may also specifically identify
situations where they do not wish to be actively involved with the investee companies e.g. in
case of small investments.
The investors should also keep in mind SEBI (Prevention of Insider Trading) Regulations while
seeking information from the investee companies for the purpose of monitoring.
Accordingly, the institutional investors shall formulate a policy on monitoring specifying, inter-
alia, the following:
1. Different levels of monitoring in different investee companies. E.g. companies where larger
investments are made may involve higher levels of monitoring vis-à-vis companies where
amount invested in insignificant from the point of view of its assets under management.
2. Areas of monitoring which shall, inter-alia, include:
a. Company strategy and performance - operational, financial etc.
b. Industry-level monitoring and possible impact on the investee companies.
c. Quality of company management, board, leadership etc.
d. Corporate governance including remuneration, structure of the board (including
board diversity, independent directors etc.) related party transactions, etc.
e. Risks, including Environmental, Social and Governance (ESG) risks
f. Shareholder rights, their grievances etc.
3. Identification of situations which may trigger communication of insider information and the
procedures adopted to ensure SEBI (Prevention of Insider Trading) Regulations are complied
with in such cases.
 Principle 4
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Institutional investors should have a clear policy on intervention in their investee companies.
Institutional investors should also have a clear policy for collaboration with other institutional
investors where required, to preserve the interests of the ultimate investors, which should be
disclosed.
Guidance
Institutional investors should have a clear policy identifying the circumstances for active
intervention in the investee companies and the manner of such intervention. The policy should
also involve regular assessment of the outcomes of such intervention. Intervention should be
considered even when a passive investment policy is followed or if the volume of investment is
low, if the circumstances so demand.
Circumstances for intervention may, inter alia, include poor financial performance of the
company, corporate governance related practices, remuneration, strategy, ESG risks,
leadership issues, litigation etc.
The mechanisms for intervention may include meetings/discussions with the management for
constructive resolution of the issue and in case of escalation thereof, meetings with the boards,
collaboration with other investors, voting against decisions, etc. Various levels of intervention
and circumstances in which escalation is required may be identified and disclosed. This may
also include interaction with the companies through institutional investor associations (E.g.
AMFI). A committee may also be formed to consider which mechanism to be opted, escalation
of matters, etc. in specific cases.
 Principle 5
Institutional investors should have a clear policy on voting and disclosure of voting activity.
Guidance
To protect and enhance wealth of the clients/ beneficiaries and to improve governance of the
investee companies, it is critical that the institutional investors take their own voting decisions
in the investee company after in-depth analysis rather than blindly supporting the management
decisions.
This requires a comprehensive voting policy to be framed by the institutional investors including
details of mechanisms of voting, circumstances in which voting should be for/against/abstain,
disclosure of voting, etc. The voting policy, voting decisions (including rationale for decision),
use of proxy voting/voting advisory services, etc. should be publicly disclosed.
The voting policy shall, inter-alia, include the following:
1. Mechanisms to be used for voting (e.g. e-voting, physically attending meetings, voting
through proxy, etc.)
2. Internal mechanisms for voting including:
a. Guidelines on how to assess the proposals and take decision thereon
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b. Guidelines on how to vote on certain specific matters/ circumstances including list
of such possible matters/circumstances and factors to be considered for a decision to
vote for/ against/ abstain
c. Formulation of oversight committee as an escalation mechanism in certain cases
d. Use of proxy advisors
e. Policy for conflict of interest issues in the context of voting
3. Disclosure of voting including:
a. Periodicity of disclosure
b. Details of actual voting for every proposed resolution in investee companies i.e. For,
Against or Abstain
c. Rationale for voting
d. Manner of disclosure – e.g. in annual report to investors, quarterly basis on website
etc.
4. In case of use of proxy voting or other voting advisory services, disclosures on:
a. Scope of such services
b. Details of service providers
c. Extent to which the investors rely upon/use recommendations made by such
services
 Principle 6
Institutional investors should report periodically on their stewardship activities.
Guidance
Institutional investors shall report to their clients/ beneficiaries periodically on how they have
fulfilled their stewardship responsibilities as per their policy in an easy-to-understand format.
However, it may be noted that the compliance with the aforesaid principles does not constitute
an invitation to manage the affairs of a company or preclude a decision of the institutional
investor to sell a holding when it is in the best interest of clients or beneficiaries.
Institutional investors shall report periodically on their stewardship activities in the following
manner:
1. A report may be placed on website on implementation of every principle. Different principles
may also be disclosed with different periodicities. E.g. Voting may be disclosed on quarterly
basis while implementation of conflict of interest policy may be disclosed on an annual basis.
Any updation of policy may be disclosed as and when done.
2. The report may also be sent as a part of annual intimation to its clients/ beneficiaries.
*****
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ANNEXURE 9: FREQUENTLY ASKED QUESTIONS (FAQs)
1. SEBI has prepared a FAQs on mutual funds. The same is updated by SEBI from time to
time. FAQs are available on SEBI website under “SEBI Website -> FAQs -> Mutual
Funds”.
2. Link for accessing FAQs is given below:
Details Link
https://www.sebi.gov.in/sebi_data/faqfiles/apr-
2023/1682683461615.pdf
FAQs for Mutual Fund Intermediaries
https://www.sebi.gov.in/sebi_data/faqfiles/apr-
2023/1682683491126.pdf
FAQs for Mutual Fund Investors
*****
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ANNEXURE 10: PRODUCT LABELLING IN MUTUAL FUND SCHEMES – RISK-o-
METER477
Risk level of a scheme shall be evaluated using the following methodology:
1. The underlying securities of a scheme shall be assigned a value for each of the
parameters based on which the risk-o-meter value will be calculated.
2. For the purpose of evaluation of risk level, AUM of the security forming part of the
scheme portfolio shall be as on last day of the given month.
3. The evaluation of risk parameters are as detailed below:
i. Debt securities
a) Credit Risk
 Debt securities of schemes shall be valued for credit risk as follows:
TABLE 1
Credit rating of the Instrument CREDIT RISK VALUE
G-Sec/AAA/SDL/ TREPS 1
AA+ 2
AA 3
AA- 4
A+ 5
A 6
A- 7
BBB+ 8
BBB 9
BBB- 10
Unrated 11
477 SEBI Circular no. SEBI/HO/IMD/DF3/CIR/P/2020/197 dated October 05, 2020
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TABLE 1
Credit rating of the Instrument CREDIT RISK VALUE
Below investment grade 12
 Based on the weighted average value of each instrument (weights based
on the AUM), credit risk value of the portfolio shall be assigned.
 The price of debt instrument to be considered for calculating AUM shall
include the accrued interest i.e. dirty price.
 For the above purpose, credit rating of the instrument as on last day of the
month shall be considered.
b) Interest Rate Risk
 Interest rate risk shall be valued using Macaulay Duration of the Portfolio:
TABLE 2
INTEREST RATE RISK
Macaulay Duration of the portfolio (years)
VALUE
≤ 0.5 1
> 0.5 to ≤ 1 2
> 1 to ≤ 2 3
> 2 to ≤ 3 4
> 3 to ≤ 4 5
> 4 6
 For the above purpose, Macaulay Duration of an instrument as on last day
of the month shall be considered.
c) Liquidity Risk
 For measuring liquidity risk of the schemes, listing status, credit rating,
structure of debt instruments is considered.
 Liquidity risk of the debt securities shall be valued as follows:
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TABLE 3
LIQUIDITY
Instrument
RISK VALUE
TREPS/G-Sec/AAA rated PSU/SDLs 1
Listed AAA rated debt securities without bespoke
structures/ structured obligations, credit enhancements or 2
embedded options*
Listed AA+ rated debt securities without bespoke
structures/ structured obligations, credit enhancements or 3
embedded options*
Listed AA rated debt securities without bespoke structures/
structured obligations, credit enhancements or embedded 4
options*
Listed AA- rated debt securities without bespoke structures/
structured obligations, credit enhancements or embedded 5
options*
Listed A+ rated debt securities without bespoke structures/
structured obligations, credit enhancements or embedded 6
options*
Listed A rated debt securities without bespoke structures/
structured obligations, 7credit enhancements or embedded 7
options*
Listed A- rated debt securities without bespoke structures/
structured obligations, credit enhancements or embedded 8
options*
Listed BBB+ rated debt securities without bespoke
structures/ structured obligations, credit enhancements or 9
embedded options*
Listed BBB rated debt securities without bespoke
structures/ structured obligations, credit enhancements or 10
embedded options*
Listed BBB- rated debt securities without bespoke
structures/ structured obligations, credit enhancements or 11
embedded options*
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TABLE 3
LIQUIDITY
Instrument
RISK VALUE
AAA rated debt securities with any one of the following
features*-
 unlisted
 bespoke structure 3
 structured obligation
 credit enhancement
 embedded options
AA + rated debt securities with any one of the following
features*-
 unlisted
 bespoke structure 4
 structured obligation
 credit enhancement
 embedded options
AA rated debt securities with any one of the following
features*-
 unlisted
 bespoke structure 5
 structured obligation
 credit enhancement
 embedded options
AA- rated debt securities with any one of the following
features*-
 unlisted
 bespoke structure 6
 structured obligation
 credit enhancement
 embedded options
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TABLE 3
LIQUIDITY
Instrument
RISK VALUE
A+ rated debt securities with any one of the following
features*-
 unlisted
 bespoke structure 7
 structured obligation
 credit enhancement
 embedded options
A rated debt securities with any one of the following
features*-
 unlisted
 bespoke structure 8
 structured obligation
 credit enhancement
 embedded options
A- rated debt securities with any one of the following
features*-
 unlisted
 bespoke structure 9
 structured obligation
 credit enhancement
 embedded options
BBB+ rated debt securities within investment grade with
any one of the following features*-
 unlisted
 bespoke structure 10
 structured obligation
 credit enhancement
 embedded options
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TABLE 3
LIQUIDITY
Instrument
RISK VALUE
BBB rated debt securities within investment grade with any
one of the following features*-
 unlisted
 bespoke structure 11
 structured obligation
 credit enhancement
 embedded options
BBB- rated debt securities within investment grade with any
one of the following features*-
 unlisted
 bespoke structure 12
 structured obligation
 credit enhancement
 embedded options
AAA rated debt securities with more than one of the
following features*-
 unlisted
 bespoke structure 4
 structured obligation
 credit enhancement
 embedded options
AA + rated debt securities with more than one of the
following features*-
 unlisted
 bespoke structure 5
 structured obligation
 credit enhancement
 embedded options
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TABLE 3
LIQUIDITY
Instrument
RISK VALUE
AA rated debt securities with more than one of the following
features*-
 unlisted
 bespoke structure 6
 structured obligation
 credit enhancement
 embedded options
AA- rated debt securities with more than one of the
following features*-
 unlisted
 bespoke structure 7
 structured obligation
 credit enhancement
 embedded options
A+ rated debt securities with more than one of the following
features*-
 unlisted
 bespoke structure 8
 structured obligation
 credit enhancement
 embedded options
A rated debt securities with more than one of the following
features*-
 unlisted
 bespoke structure 9
 structured obligation
 credit enhancement
 embedded options
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TABLE 3
LIQUIDITY
Instrument
RISK VALUE
A- rated debt securities with more than one of the following
features*-
 unlisted
 bespoke structure 10
 structured obligation
 credit enhancement
 embedded options
BBB+ rated debt securities with more than one of the
following features*-
 unlisted
 bespoke structure 11
 structured obligation
 credit enhancement
 embedded options
BBB rated debt securities with more than one of the
following features*-
 unlisted
 bespoke structure 12
 structured obligation
 credit enhancement
 embedded options
BBB- rated debt securities with more than one of the
following features*-
 unlisted
 bespoke structure 13
 structured obligation
 credit enhancement
 embedded options
Below investment grade and unrated debt securities 14
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TABLE 3
LIQUIDITY
Instrument
RISK VALUE
*Or any other structure / feature which increase the liquidity risk of the
instrument.
 Liquidity Risk Value of a portfolio shall be assigned based on the weighted
average of such values (weights based on the AUM) of each instrument.
 For the above purpose, instruments held by the scheme as on last day of
the month shall be considered.
d) Risk value for the debt portfolio shall be simple average of credit risk value,
interest rate risk value and liquidity risk value. However, if the liquidity risk value
is higher than the average of credit risk value, liquidity risk value and interest
rate risk value then the value of liquidity risk shall be considered as risk value
of the debt portfolio.
e) For investment by mutual funds in instruments having short term ratings, the
liquidity risk value and the credit risk value shall be based on the lowest long
term rating of the instrument of the same issuer as shown above (in order to
follow conservative approach) across credit rating agencies. However, if there
is no long term rating of the same issuer, then based on credit rating mapping
most conservative long term rating shall be taken for a given short term rating.
ii. Equity
a) Market Capitalisation
 Following values shall be assigned to the security for market capitalisation
parameter:
TABLE 4
Market Cap of the underlying MARKET CAPITALISATION
security VALUE
Large cap 5
Mid cap 7
Small cap 9
 The market capitalisation data as published by AMFI on six-monthly basis
shall be considered.
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 Based on the weighted average of the above Market Capitalisation values
of each security (weights being AUM of the security), Market Capitalisation
Value of a portfolio shall be assigned.
b) Volatility
 Following values shall be assigned to the security based on its volatility:
TABLE 5
Daily Volatility of the Security price VOLATILITY VALUE
(based on the past two years price
of the security)
≤ 1% 5
> 1% 6
 Based on the weighted average of above volatility values of each security
(weights being AUM of the security), Volatility Value of a portfolio shall be
assigned.
If an instrument is traded on multiple stock exchanges, then the most
conservative volatility value across stock exchanges for a given month shall
be considered.
c) Impact Cost (Liquidity Measure)
 Impact cost shall be considered as a measure for liquidity. Based on the
average impact cost of the security for previous three months including the
month under consideration following values shall be assigned:
TABLE 6
Average Impact Cost of the Security for the
IMPACT COST VALUE
month
≤ 1% 5
>1 % to ≤ 2% 7
> 2% 9
 Based on the weighted average of impact cost values of each security
(weights being AUM of the security), impact cost value of a portfolio shall
be assigned.
 If an instrument is traded on multiple stock exchanges, then the impact cost
shall be based on average value of impact costs across stock exchanges
for a given month.
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d) For investment in IPOs or recently listed securities, the following process shall
be adopted for arriving at weighted average value for Risk-o-meter:
 Market Capitalisation value: Market capitalisation of a security as on the
last trading day of the month shall be compared with that of the market
capitalisation of the threshold for large cap, mid cap and small cap as
published by AMFI and then market capitalisation parameter of risk shall
be valued based on the Table 4 mentioned above.
 Volatility value: For the first three months of trading of a security, the value
for volatility shall be assigned as 6. From the subsequent months, volatility
shall be calculated based on the available security prices as mentioned at
Table 5 above.
 Impact cost value: For the first three months of trading of a security, the
impact cost value shall be assigned as 5. From the subsequent month,
impact cost value shall be as mentioned in Table 6 above.
e) Risk value for equity portfolio shall be simple average of market capitalisation
value, volatility value and impact cost value.
iii. Equity Derivatives
 For hedging positions, the underlying security held and its corresponding
derivative instrument shall not be included for arriving at risk value. For
instance, if XYZ security in cash market is being hedged by its futures
instrument, then the XYZ cash market security and short futures position in
XYZ security both shall not be considered for arriving at risk value.
 If the quantity of derivative positions taken for hedging purposes are in
excess of the underlying position against which the hedging position has
been taken, the excess position shall be included while calculating the risk
value.
iv. Index Futures and Stock Futures
 For index and stock futures, following values are to be assigned:
TABLE 7
INDEX / STOCK FUTURES
Value for Index / Stock futures
VOLATILITY VALUE
≤ NIFTY near month futures
5
annualized volatility
> NIFTY near month futures
6
annualized volatility
 Based on the weighted average of above values of each security (weights
being AUM of the security), the risk value shall be assigned to the portfolio.
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v. Index Options and Stock Options
 For index and stock options, following values are to be assigned:
TABLE 8
INDEX / STOCK OPTIONS’
Value for Index / Stock options
IMPLIED VOLATILITY VALUE
≤ India VIX 5
> India VIX 6
 Based on the weighted average of above values of each security (weights
being AUM of the security), the risk value shall be assigned to the portfolio.
vi. Other derivative instruments
 If the derivative instrument is used for hedging, then the hedging instrument
shall not be included for calculating the risk value only if the quantity of
derivative instrument is less than or equal to the quantity of
underlying/instrument being hedged. If the derivative instrument position is
in excess of the underlying then the excess position shall be considered
while calculating the risk value.
 If Interest rate swaps (IRS) are being used for hedging purpose, then IRS
shall not be considered for arriving at the risk value.
 For investment in other derivative instruments, such instruments shall be
valued as under:
TABLE 9
Daily Volatility of the instrument VOLATILITY VALUE
≤ 1% 5
>1% 6
 Volatility calculated above is based on daily close prices of past three
months of the instrument.
 Based on the weighted average of above values of each security (weights
being AUM of the security), the risk value shall be assigned to the portfolio.
vii. InvITs
 Investment by schemes in InvITs shall be valued as 7 from risk perspective.
 Based on the weighted average of each security (weights being AUM of the
security), the risk value shall be assigned to the portfolio.
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viii. Commodities (Gold/Silver) in which mutual funds are permitted to invest:478
 Investment in Gold/Silver and gold/silver related instruments by mutual fund
schemes shall be assigned a risk score corresponding to the annualized
volatility of the price of said commodity. The annualized volatility shall be
computed quarterly based on past 15 years’ prices of benchmark index of
the said commodity and risk score for the commodity shall be in terms of
the following table:
Annualized volatility Risk value on risk-o-meter (Risk)
<10% 3 (Moderate)
10-15% 4 (Moderately High)
15-20% 5 (High)
>20% 6 (Very high)
Illustration: If price of gold has annualized volatility of 18% based on price
of gold of past 15 years, then Gold and gold related instruments will have
risk value of 5 (High) on risk-o-meter.
ix. Foreign Securities
 Investment by schemes in foreign securities shall be valued as 7 from risk
perspective.
 Based on the weighted average of each security (weights being AUM of the
security), the risk value shall be assigned to the portfolio.
x. Mutual Fund Schemes:
 For schemes holding units of other mutual fund schemes, the following
values shall be assigned basis the risk-o-meter of underlying schemes:
TABLE 10
Risk as per risk-o-meter Value
Low 1
Low to Moderate 2
Moderate 3
478 SEBI Circular No. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2022/49 dated April 11, 2022
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TABLE 10
Risk as per risk-o-meter Value
Moderately High 4
High 5
Very High 6
 The risk value for investment in overseas mutual fund units or ETFs shall
be 7.
 Based on the weighted average of each mutual fund scheme held (weights
being AUM of the scheme), the risk value shall be assigned to the portfolio.
xi. Cash and Net Current Assets:
 Cash and Net Current Assets, shall be valued as 1 from risk perspective.
4. Risk-o-meter value
 Based on the above calculations, the risk value arrived upon shall be
mapped to the risk level mentioned in the table below and the same may
be depicted in the risk-o-meter:
TABLE 11
Risk Value RISK LEVEL AS PER RISK-O-METER
≤ 1 Low
>1 to ≤ 2 Low to Moderate
>2 to ≤ 3 Moderate
>3 to ≤ 4 Moderately High
>4 to ≤ 5 High
>5 Very High
5. Illustrations:
In order to illustrate the above process, following are a few illustrations:
1. Debt scheme
 Consider a debt scheme category having 10 debt securities with following
attributes:
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o At the portfolio level, the average Macaulay Duration is 1.41
TABLE 12
Securities
Weight as Credit
held by the Structure
% of AUM rating
scheme
AAA -
A 10% No additional feature/structure
PSU
B 10% AA- Unlisted and has structured obligation
C 10% A No additional feature/structure
D 10% BBB+ No additional feature/structure
E 10% AA Has credit enhancement
F 10% AA+ Is bespoke and unlisted
G 10% A No additional feature/structure
H 10% AA No additional feature/structure
I 10% AAA No additional feature/structure
J 10% TREPS -
DEBT- Security A to J
 Based on the above portfolio, following shall be parameter based valuing
of securities held by the scheme:
TABLE 13
Securities Credit
Weight as % Interest Rate Liquidity
held by the Risk
of AUM Risk Value risk value
scheme value
A 10% 1 1
B 10% 4 7
C 10% 6 7
D 10% 8 9
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TABLE 13
Securities Credit
Weight as % Interest Rate Liquidity
held by the Risk
of AUM Risk Value risk value
scheme value
E 10% 3 5
F 10% 2 5
G 10% 6 7
H 10% 3 4
I 10% 1 2
J 10% 1 1
TOTAL* 3.5 3 4.8
*Total is calculated as weighted average with weights based on AUM
of the instrument in the scheme as under:
TABLE 14
Parameter Average Value
Credit risk 0.1 X 1 + 0.1 X 4 + 0.1 X 6 + 0.1 X 8 + 0.1 X 3 + 3.5
0.1 X 2 + 0.1 X 6 + 0.1 X 3 + 0.1 X 1 + 0.1 X 1
IR Risk 1 x 3 3
LR value 0.1 X 1 + 0.1 X 7 + 0.1 X 7 + 0.1 X 9 + 0.1 X 5 + 4.8
0.1 X 5 + 0.1 X 7 + 0.1 X 4 + 0.1 X 2 + 0.1 x 1
Simple 3.8
Average
PORTFOLIO RISK-O-METER VALUE:
 Simple average of the above three parameters comes out to 3.8
([3.5+3+4.8]/3)
 Since the liquidity risk value of 4.8 is higher than the average value of above
three parameters i.e. 3.8, the risk value assigned to the scheme will be 4.8.
Hence, the risk level as per Risk-o-meter is High.
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 Therefore, risk-o-meter for the abovementioned debt scheme would be
High, and shall be as depicted below:
2. Equity scheme
 Consider an Equity scheme having 10 equity securities with following
attributes:
TABLE 15
Securities Market Volatility Impact cost
Weight as
held by the Cap
% of AUM
scheme
A 10% Large Cap 0.01% 0.2%
B 10% Large Cap 1.5% 0.3%
C 10% Mid cap 2.5% 1.5%
D 10% Mid cap 1.5% 1.2%
E 10% Mid cap 2% 1.9%
F 10% Mid cap 1.5% 1.2%
G 10% Large Cap 0.005% 0.7%
H 10% IPO - -
I 10% Small Cap 1.7% 2.5%
J 10% Cash - -
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 Based on the above portfolio, following shall be the scoring of the securities
held by the scheme across parameters:
EQUITY – Security A to I
TABLE 16
Securities
Weight as Market Cap Volatility Impact cost
held by the
% of AUM Value Value Value
scheme
A 10% 5 5 5
B 10% 5 6 5
C 10% 7 6 7
D 10% 7 6 7
E 10% 7 6 7
F 10% 7 6 7
G 10% 5 5 5
H* 10% 7 6 5
I 10% 9 6 9
TOTAL 90% 6.6 5.8 6.3
* Assuming the market cap of the security at the time of listing is falling
under Mid cap as per the market cap data published by AMFI, a value
of 7 is considered. Volatility value and Impact cost value are considered
as 6 and 5 respectively.
 The TOTAL mentioned above is calculated as under:
TABLE 17
Parameter Average Value
Market 0.1 X 5 + 0.1 X 5 + 0.1 X 7 + 0.1 X 7 + 0.1 X 7 + 0.1 X 6.6
Cap 7 + 0.1 X 5 + 0.1 X 7 + 0.1 X 9
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TABLE 17
Parameter Average Value
Volatility 0.1 X 5 + 0.1 X 6 + 0.1 X 6 + 0.1 X 6 + 0.1 X 6 + 0.1 X 5.8
Value 6 + 0.1 X 5 + 0.1 X 6 + 0.1 X 6
Impact 0.1 X 5 + 0.1 X 5 + 0.1 X 7 + 0.1 X 7 + 0.1 X 7 + 0.1 X 6.3
cost value 7 + 0.1 X 5 + 0.1 X 5 + 0.1 X 9
Simple 6.2
Average
 Simple average of the above three parameters comes out to 6.2
[(6.6+5.8+6.3)/3]
CASH – Component J
 Further, cash component is valued as 1.
PORTFOLIO RISK-O-METER VALUE:
 Hence, the average for the total portfolio is 6.2 + 0.1 x 1 = 6.3
 Since the value of risk is higher than 5, it shall fall into range of Very High
Risk.
 Therefore, risk-o-meter for the abovementioned equity scheme would be
Very High, and shall be as depicted below:
3. Multi asset allocation scheme:
 Consider a Multi Asset category scheme having 10 securities with following
attributes:
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TABLE 18
Type of Securities held Weight as Impact
Market Cap Volatility
security by the scheme % of AUM cost
Equity A 20% Large Cap 0.01% 0.2%
Equity B 10% Large Cap 1.5% 0.3%
Equity C 10% Mid cap 2.5% 1.5%
Macaula
Type of Securities held Weight as a Credit
y Structure
security by the scheme % of AUM rating
Duration
Debt D 10% No
additional
A 2.6
feature/stru
cture
Debt E 10% No
additional
AA 2.1
feature/stru
cture
Debt F 10% No
additional
AAA 2.8
feature/stru
cture
TREPS G 10% - - -
Gold ETF H 10% - - -
INVITs I 10% - - -
Interest rate J -20%
swap (IRS)
 As interest rate swap instrument was used for hedging, it is not included
while calculating the risk value.
 Macaulay Duration of debt scheme portfolio (D, E & F) is 2.5 years
 Based on the above portfolio, following shall be the valuing of the securities
held by the scheme across parameters:
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TABLE 19
Securities held by Weight as % Market Cap Volatility Impact cost
the scheme of AUM Value Value Value
A 20% 5 5 5
B 10% 5 6 5
C 10% 7 6 7
Interest
Securities held by Weight as a Credit Risk Liquidity
rate risk
the scheme % of AUM value risk value
value
D 10% 6 7
E 10% 3 4
F 10% 1 2
G 10% 1 1
EQUITY- Security A, B and C
TABLE 20
Securities held by Weight as % Market Cap Volatility Impact cost
the scheme of AUM Value Value Value
A 20% 5 5 5
B 10% 5 6 5
C 10% 7 6 7
TABLE 21
Parameter Average Value
Market Cap 0.2 X 5 + 0.1 X 5 + 0.1 X 7 2.2
Volatility Value 0.2 X 5 + 0.1 X 6 + 0.1 X 6 2.2
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TABLE 21
Parameter Average Value
Impact cost value 0.2 X 5 + 0.1 X 5 + 0.1 X 7 2.2
Simple Average 2.2
DEBT- Security D, E, F and G
TABLE 22
Interest
Securities held by Weight as a Credit Risk Liquidity
rate risk
the scheme % of AUM value risk value
value
D 10% 6 7
E 10% 3 4
F 10% 1 2
G 10% 1 1
TABLE 23
Parameter Average Value
Credit risk 0.1 X 6 + 0.1 X 3 + 0.1 X 1 + 0.1 X 1 1.1
IR Risk 0.4 x 4 1.6
LR value 0.1 X 7 + 0.1 X 4 + 0.1 X 2 + 0.1 X 1 1.4
Simple Average 1.37
 For debt component, Simple average of the three parameters comes out to
1.37.
 Since the liquidity risk value of 1.4 is higher than the average value of above
three parameters i.e. 1.37, the risk value assigned to the scheme will be
1.4.
GOLD and INVITs - H and I
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TABLE 24
Securities held by Weight as a
Risk Value Value
the scheme % of AUM
H 10% 4 0.4
I 10% 7 0.7
PORTFOLIO RISK-O-METER VALUE:
 The final weighted average risk value for the portfolio is as under:
2.2 + 1.4 + 0.4 + 0.7 = 4.7
 Since the value of risk is higher than 4, it shall fall into range of High Risk.
 Therefore, risk-o-meter for the abovementioned scheme would be High,
and shall be as depicted below.
*****
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ANNEXURE 11: CORPORATE DEBT MARKET DEVELOPMENT FUND (CDMDF)
Annexure 11A - Approach to Purchase Pricing479
1. While it may not be possible to pre-empt the events and scenarios prevailing at the point
of time when purchase of securities is being undertaken by CDMDF, the investment policy
may provide for following indicative factors for determining purchase price of corporate
debt securities:
1.1. Valuation policies prescribed for Mutual Funds (based on the principles of fair
valuation).
1.2. Previous day’s valuation of securities by valuation agencies before the date of
Purchase.
1.3. Average 10 days valuation prior to start of market dislocation.
1.4. Mark-up in yield over previous day may be limited to arrive at floor price.
For eg: it may be 25/50/75 bps over AAA/AA/Below AA securities respectively.
1.5. Consideration of Spread over benchmark/ spread over sovereign yields.
1.6. Qualitative factors that may have bearing on arriving at fair price.
2. The investment policy shall be duly approved & reviewed periodically by the Board of
Trustee, Investment Committee & Governance Committee. CDMDF shall adhere to
investment framework laid down in the investment policy & the fund documents.
3. However, in case the Investment Manager is at variance from the aforesaid factors, they
may, after recording reasons in writing and approval from Investment Committee, take
such price as deemed fit with an objective of achieving the fair pricing (adjusted for liquidity
risk, interest rate risk and credit risk). Such instances shall be apprised to Governance
Committee and Board of Trustees on a regular basis.
4. Investment framework of CDMDF:
4.1. CDMDF would buy securities from secondary market of only investment grade, listed
and having residual maturity of upto 5 years.
4.2. CDMDF shall not buy any unlisted, below investment grade or defaulted debt
securities or securities in respect of which there is a material possibility of default or
adverse credit news or views. The rationale for the same shall be documented.
4.3. Purchase of securities to be done as per the above fair pricing guidelines to be
adjusted if considered appropriate by the IM for liquidity risk, interest rate risk, and
credit risk. Buying/trading to be at fair price but not at distress price.
4.4. Selling at breakeven/profit as market stabilize, to reduce borrowing as soon as
possible.
479 Inserted by SEBI Circular No. SEBI/HO/IMD/POD2/P/CIR/2023/128 dated July 27, 2023
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4.5. Valuation of portfolio shall be governed by existing norms on valuation under the
Mutual Fund regulatory framework.
********
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Annexure 11B - Loss Waterfall Accounting for CDMDF480
Based on deliberations with Mutual Fund industry, the following shall be the approach for
reflection of waterfall in the NAV of units of CDMDF
A. There shall be three classes of units to be allotted by CDMDF, which shall be as
follows:
1. Class A1 and Class B units shall be allotted to AMCs and Sponsor/IM
respectively (against one time contribution of 0.02% of AUM of specified debt
schemes and Sponsor/IM commitment). Class A1 units and Class B units are
treated at par and referred as Class A1 units only.
2. Class A2 units shall be allotted to specified debt schemes (contributing 0.25%
of AUM of specified debt schemes)
3. Class A3 units shall be allotted to Mutual Fund schemes selling debt securities
to the Fund (where 10% of the consideration is in the form of units of CDMDF,
called A3 units)
B. Daily NAV should reflect the fair value of each unit class including the effect of
differential treatment of A3 unit class. The loss waterfall based on CDMDF Framework
is as follows:
Level of loss absorption Particulars Hereinafter referred as
1st Up to 10% by MF schemes Class A3 units
selling debt securities to the
Fund (i.e., equivalent to the
units outstanding of the
selling MF schemes issued
to them against sale of
securities to CDMDF)
2nd Contribution of specified debt Class A1 and A2 units
oriented MF Schemes and
AMCs
3rd Government Guarantee NA
C. The following process shall be followed:
1. All profits/losses/income/gains/expenses to be apportioned to A1 and A2 unit
class in ratio of their AUM during the normal times.
2. A3 units to be allotted at the same NAV as that of A1 & A2 at the time of opening
of market dislocation.
3. All profits/losses/income/gains/expenses (including cost of leverage) to be
apportioned to all the 3 class of units during the market dislocation and
480 Inserted by SEBI Circular No. SEBI/HO/IMD/POD2/P/CIR/2023/128 dated July 27, 2023
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subsequently till A3 units exits (i.e A1/A2/A3), except that the NAV of A1 and
A2 should not drop below their opening NAV (opening NAV at the time of
market dislocation). Since A1 and A2 units are to be protected at their opening
NAV to that extent the excess/unabsorbed loss/expense would be debited to
only A3 unit class. This would mean the NAV of A3 units could drop below the
NAV of A1&A2
4. Any subsequent profits/gains/income will be first credited to the A3 unit class
to an extent that they come back at par with A1 & A2 NAV, and then the balance
to be apportioned to all the three unit class.
5. A3 units will not get any exit till there is an outstanding portfolio from market
dislocation and leverage is completely paid.
6. Any subsequent allotment of A3 units would be at the same NAV as that of the
existing A3 units (if they exist), otherwise at opening NAV of A1 and A2. There
will be only one class/bucket of A3 units irrespective of whether they were
issued in subsequent tranche of purchase during a particular phase of market
dislocation or were issued during another phase of market dislocation.
Therefore, any adjustment for loss/expense will be carried out to the entire
bucket o A3 units irrespective of when they were allotted.
7. There will not be any segregation of portfolio linking to different phase or
tranches of purchase during the market dislocation, entire portfolio will be one
common pool, both during the normal times or during the market dislocation
including if there is any security that exist from normal times and is continued
during the market dislocation
8. The accounting of A3 and certain adjustments of NAV may require manual
workings by the fund accountant and will not be completely system driven.
Such manual workings can be subject to second check by the concurrent
auditor.
D. The above is as per various scenarios that have been envisaged currently. There may be a
need that may arise with some other scenarios emerging and the same would be dealt with
appropriately through relevant committee.
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Loss Waterfall accounting for CDMDF
Allocation Mechanism
Investment
Situation System
INR A1 A2 Total GSEC/C MD-
A3 BLO INVT A3
Subscripti 1,000 1,000 - 2,00
on Face 0
10.00 10.00 -
value
Number of 100 100 -
units
Part A
System driven calculation
Scenario - 1 2,00 2,01 Investment in Government Securities and T-
0 0 Bills
MTM Gain is proportionately allocated to all
the unit holders (except A3 doesn't exist as of
MTM Gain 5 5 - 10
now)
NAV of the unit 10.05 10.05 -
NAV of the Corpus 1,005 1,005 - 2,01
0
System driven calculation
Scenario - 2 2,00 Investment in Government Securities and T-
2 Bills
MTM loss is proportionately allocated to all
the unit holders (except A3 doesn't exist as of
MTM Loss -4 -4 - -8
now)
NAV of the unit 10.01 10.01 -
NAV of the corpus 1,001 1,001 - 2,00
2
System driven calculation
Scenario - 3 2,00 Investment in Government Securities and T-
6 Bills
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Gain is proportionately allocated to all the unit
holders (except A3 doesn't exist as of now)
Realised gain 2 2 - 4
NAV of the unit 10.03 10.03 -
NAV of the Corpus 1,003 1,003 - 2,00
6
System driven calculation
Scenario - 4 2,00 Investment in Government Securities and T-
4 Bills
loss is proportionately allocated to all the unit
holders (except A3 doesn't exist as of now)
Realised loss -1 -1 - -2
NAV of the unit 10.02 10.02 -
NAV of the corpus 1,002 1,002 - 2,00
4
System driven calculation
Scenario - 5 204 2,00Market Dislocation triggered
0
Opening NAV of 1,002 1,002 - 2,004
the Corpus
100 100 -
Number of
opening units
10.02 10.02 -
Opening NAV of
the unit - - 200
10- . 02 - 10.0
19.96
102.000 2
A3 NAV assumed to be same as A1 and A2
2
Additional Capital
while allotting the units. A1 and A2 NAV will be
the opening NAV for the market dislocation
trigger
NAV at the which the units to
be allotted
Number of additional units
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Total corpus (NAV) 1,002 1,002 2,20
200 4
Part B
system driven except the FA needs to now start monitoring
the NAV of A1 and A2 should not drop below their opening
Scenario - 6 214 2,00MTM profit
0 NAV of Rs. 10.02 till A3 NAV is positive
MTM gain gets apportioned to all the unit class
MTM Gain 4.5 4.5 10
0.9
NAV of the unit
10.07 10.07
10.07
NAV of the Corpus 1,007 1,007 2,21
201 4
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system driven except the FA needs to now start monitoring
the NAV of A1 and A2 should not drop below their opening
Scenario - 7 206 2,00MTM Loss
0 NAV of Rs. 10.02 till A3 NAV is positive
MTM gain gets apportioned to all the unit
class, however the NAV of A1 and A2 should
MTM Loss -3.6 -3.6 - -8
0.7 not drop below opening NAV of 10.02
NAV of the unit
10.03 10.03
10.03
NAV of the corpus 1,003 1,003 2,20
200 6
system driven except the FA needs to now start monitoring
the NAV of A1 and A2 should not drop below their opening
Scenario - 8 710 1,50Realised Gain
0 NAV of Rs. 10.02 till A3 NAV is positive
Realised gain gets apportioned to all the unit
Realised gain 1.8 1.8 4
class
0.4
NAV of the unit
10.05 10.05
10.05
NAV of the Corpus 1,005 1,005 2,21
201 0
Scenario - 9 908 1,30
0
system driven except the FA needs to now start monitoring the
Realised loss -0.9 -0.9 - -2 Realised Loss NAV of A1 and A2 should not drop below their opening NAV of
0.2 Rs. 10.02 till A3 NAV is positive
NAV of the unit
10.04 10.04
10.04
Realised Loss gets apportioned to all the unit
NAV of the corpus 1,004 1,004 2,20 class
200 8
Page 453 of 748
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Manual working and intervention required
Scenario - 10 888 1,30Significant MTM loss
0
MTM loss -9.1 -9.1 - -20
1.8
with the loss getting apportioned to all the 3
unit classes, the NAV of A1 and A2 is falling
NAV of the unit
below their opening NAV of 10.020
9.95 9.95
9.95
NAV of the corpus 995 995 2,18
199 8
Manual working and adjustment to be carried out
888 1,30
0
Current NAV of units 10.04 10.04
Less: Protection to 10.02
opening NAV Surplus 10.0
2
to absorb the w/off
Number of units 0.02 0.02
100
10
0
Loss to be absorbed by A1 1.82 1.82 3.64
NAV post the loss absorption 10.02 10.02
which is same as the opening NAV
and A2
-
Unabsorbed loss entirely to A3 -16.36
16.3
Corpus NAV of A3 units 6
post absorbing the waterfall
184
loss Now A3 unit NAV drops below the NAV of A1
and A2. this is manual adjustment to be done
in the system where there should be transfer
A3 class unit NAV post of value between the unit class based on
9.22
absorbing the waterfall loss such workings
Closing corpus( NAV) 1,002 1,002 2,18
184 8
Manual working and intervention required
Scenario - 11 1,85 300 Significant cash loss (realised loss)
8 Page 454 of 748
Annexures to the Master Circular for Mutual Funds as on March 20, 2026
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Cash loss -13.7 -13.7 - -30
2.5
with the loss getting apportioned to all the 3
NAV of the corpus 988 988 2,15 unit classes, the NAV of A1 and A2 is falling
NAV of the unit 181 8
below their opening NAV of 10.020
9.88 9.88
9.09
Manual working and adjustment to be carried out
Current NAV of units 10.02 10.02
Less: Protection to 10.02
opening NAV Surplus 10.0
2
to absorb the w.off
Number of units - -
100
Loss to be absorbed by A1 - 1- 0 -
and A2 0
NAV post the loss absorption 10.02 10.02
which is same as the opening NAV
-30
Unabsorbed loss entirely to A3 -30
Corpus NAV of A3 units
post absorbing the waterfall
154
loss Now A3 unit NAV drops below the NAV of A1
and A2. this is manual adjustment to be done
in the system where there should be transfer
A3 class unit NAV post of value between the unit class based on
7.72
absorbing the waterfall loss such workings
Closing corpus( NAV) 1,002 1,002 2,15
154 8
Additional Security of Rs 1000 purchased and
A3 units issued for 10%
Scenario -12 1,03 1,30 Manual working and intervention required
8 0
Current NAV 10.02 10.02 7.72
& MTM Gain of 80
of units
100 100 19.96
Number of
12.96
units
100
ACdodrpitiuosn aNl AV post bridging 1,002.00 1,002.00 2,333.
- - 100
ut
B
hn
a
ei
l
t
a
sg
n
a
c
p
e Cash profit to be
329.87 87
4 .13
distributed 1.77 1.77 2.30
Additional 4.13
0.58
CD
N
i AaspV trii tb paule t
r
io
u
n
n
o
it
f balance profits
10.04 10.04 2,33880
1,0 03.77 1,01003.0.747 Page 455 of 748
Closing 75.87
Shortfall in A3 NAV Corpus
330.45 Annexures to the Master Circular for Mutual Funds as on March 20, 2026
corpus NAV
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Cash profit to be first
Number of 100 100
adjusted to bridge the
units 32.92
shortfall
Scenario -13 1,31 1,00A3 portfolio sold of Rs 300 at Realised loss of Manual working and intervention required
3 0 Rs 40 & MTM of Rs 15
MTM Gain - - - 15
Cash Loss -40
Current NAV of units 10.04 10.04
10.04
Less: Protection to
10.02 10.02
opening NAV Surplus
to absorb the w/off 0.02 0.02
Number of units
100 100
Loss to be absorbed by A1 -1.77 -1.77 -
NAV post the loss absorption 10.02 10.02
and A2 3.5
-5
Unabsorbed loss entirely to A3 -21.45
21.4
A3 class unit NAV post 5
absorbing the waterfall loss
9.39
Corpus NAV post bridging 1,002 1,002 2,31
NAV of all unit holders post 10.-0 2 10.02 9.39
l
t
o
h
s
e
s
g
a
a
ll
p
o cation
309 3
100.00 100.00 32.92
Number of units across unit MTM gain gets apportioned to A3 until the
232.
S ho c l e d n e a rs ri o -14 92 1,34 1,00Opening NAV and then to all remaining unit Manual working and intervention required
3 0 holders
MTM Gain 30
10.02 10.02 9.39
NAV of the unit
0.63
Shortfall in A3 (2)NAV Corpus
Corpus NAV post bridging 1,002.00 1,002.00 2,33
Cthaes hg appro fit to be first 329.87 4
adjusted to bridge the 20.87
shortfall
Balance Cash profit to be 9.13
Post gains apportioned to A3 balance MTM gain
distributed
gets apportioned to all the unit class
3.92 3.92
9.13
1.29
Distribution of balance profits
2,343
1,005.92 1,005.92
Corpus AUM post bridging
331.16
the gap
100.00 100.00
Units Held by unit holders
32.92
Page 456 of 748
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NAV after distribution 10.06 10.06
10.06
Notes:
1. Post achieving parity in NAV again the normal accounting would sta
Page 457 of 748
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ANNEXURE 12: EXECUTION ONLY PLATFORMS481
Annexure 12A – Minimum Disclosure Requirements
Minimum disclosure requirements for every scheme of Mutual Funds offered for execution
on the EOP:
1. Name of the Mutual Fund. Link to Mutual Fund website whose products are
offered.
2. Name of the scheme of the Mutual Fund. Type and category of the scheme of
Mutual Fund.
3. Name of the Fund Manager.
4. Investment objective of scheme.
5. Scheme performance along with source.
6. Scheme details such as minimum investment, AUM, NAV, Exit Load, Expense
Ratio.
7. Risk-o-Meter of the scheme and Potential Risk Matrix, wherever applicable.
8. Other mandatory disclosures regarding Mutual Fund scheme to the investors.
9. Any other details / documents as may be specified by SEBI from time to time.
481 Inserted by SEBI Circular No. SEBI/HO/IMD/IMD-I –PoD1/P/CIR/2023/86 dated July 13, 2023
Page 458 of 748
Annexures to the Master Circular for Mutual Funds as on March 20, 2026
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Annexure 12B – Records to be maintained by Category 2 EOP
The Category 2 EOP shall keep and maintain the following books of account, records and
documents, namely: —
a) Details of investor wise transactions, including time of request for subscription and
redemption.
b) Details of failed transactions, if any and the reasons thereof.
c) Documents pertaining to on-boarding of clients including KYC documents, client
account opening forms and Rights and Obligation documents.
*****
Page 459 of 748
Annexures to the Master Circular for Mutual Funds as on March 20, 2026
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ANNEXURE 13: SPECIALIZED INVESTMENT FUNDS (SIF)
Annexure 13A - Illustration on Derivative Exposure
Investment strategy ‘ABC Long-Short Equity Fund’ has AUM of 100 crore. The
following table specifies the list of securities identified for investment:
Security details Price Lot size
XYZ Ltd. 2500 N.A.
XYZ Futures 2525 500
XYZ Call option 2500 90 500
XYZ Put option 2500 85 500
A) Maximum exposure limits:
The following table illustrates the maximum amount/contracts that can be bought/sold
under the investment strategy:
Details Provisions/Exposure Maximum Maximum no.
calculation amount that of contracts
can be that can be
invested bought/sold
XYZ Ltd. futures short position Maximum 25% of unhedged INR 10 crore 79 contracts
(without hedging/ without having short exposure
underlying security in the
portfolio) = 10 crore /
Exposure to single stock <= (2525*500)
10% of investment strategy
Overall stock futures short Maximum 25% of unhedged INR 25 crore -
position at portfolio level across short exposure
multiple securities
XYZ Call option 2500 long Max 20% exposure (ref. INR 10 crore 2222 contracts
position Paragraph 13.18.3 of Master
Circular for Mutual Funds)
= 10 crore / (90
* 500)
Exposure to single stock <=
10% of investment strategy
Page 460 of 748
Annexures to the Master Circular for Mutual Funds as on March 20, 2026
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XYZ Call option 2500 short Max 20% exposure (ref. INR 10 crore 80 contracts
position 12.25.2 of this Master Circular
for Mutual Funds)
= 10 crore /
(2500 * 500)
Exposure to single stock <=
10% of investment strategy
B) Illustration on portfolio composition:
The following examples illustrates possible usage of derivatives for portfolio construction
of the investment strategy:
Example 1 Example 2
Investment Details Amount (Total: Investment Details Amount (Total: INR
INR 100 crore) 100 crore)
Investment in EQ INR 70 crore Investment in EQ INR 62.5 crore
Cash holding INR 5 crore Investment in EQ Long INR 10 crore
Futures & Long options
Short exposure using INR 25 crore Cash holding INR 2.5 crore
stock/index futures
Short exposure using INR 25 crore*
stock/index futures
*Since unhedged short exposure of upto
25% is additional to the investment in
derivatives for purposes other than
hedging and portfolio rebalancing.
Represents unhedged short exposure through derivatives
Represents derivatives exposure for the purpose of hedging and portfolio
rebalancing
C) Offsetting of transactions:
As per the provisions of the circular, the investment strategy is allowed to offset certain
derivative transactions. Below are some of the illustrative scenarios for offsetting of
positions on the same underlying security.
Page 461 of 748
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Sr. Position 1 Position 2 Offsetting Net exposure to be
No. allowed/not? considered
1 Equity Long Futures Short Yes Equity Long only
2 Equity /Futures Long Call option Short Yes Equity /Futures Long
only
3 Equity /Futures Long Put option Long Yes Equity /Futures Long
only
4 Futures Short Call option Long Yes Futures Short only
5 Futures Short Put option Short Yes Futures Short only
6 Call option Long Call option Short Yes Call option Short only
7 Put option Long Put option Short Yes Put option short only
8 Equity Long Futures Long No Equity Long + Futures
Long
9 Equity /Futures Long Call option Long No Equity /Futures Long +
Call option Long
10 Equity /Futures Long Put option Short No Equity /Futures Long +
Put option Short
11 Futures Short Call option Short No Futures short + Call
option short
12 Futures Short Put option Long No Futures short + Put
option Long
13 Call option Long Put option Short No Call option Long + Put
option Short
14 Call option Short Put option Long No Call option Short + Put
option Long
*For offsetting of positions, the futures and options contracts shall be on the same
underlying security and having same expiry date.
*****
Page 462 of 748
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FORMATS
Placed below are the formats prescribed by the Board, standardizing disclosure by the
AMC to unitholders as well as reporting to the Board. Please note that, as compliance
of SEBI Regulations is a continuous process, you are advised to incorporate the
modifications/additions under the relevant sections of the format, based on
amendments to the Regulations/guidelines issued in the future from time to time.
Page 463 of 748
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INDEX OF FORMATS
1. REGISTRATION RELATED FORMS ........................................................................................................... 466
A. APPLICATION FOR THE GRANT OF REGISTRATION OF MUTUAL FUND ............................................. 466
B. CERTIFICATE OF REGISTRATION .................................................................................................................. 471
C. TRUSTEESHIP OF THE MUTUAL FUND ........................................................................................................ 472
D. REGISTRATION OF ASSET MANAGEMENT COMPANY ............................................................................ 474
E. BIO-DATA OF DIRECTOR OF AMC/ TRUSTEE COMPANY ........................................................................ 478
F. BIO-DATA OF KEY PERSONNEL ...................................................................................................................... 482
2. APPLICATION FORMS ................................................................................................................................. 486
A. FORMAT OF APPLICATION BY MUTUAL FUNDS FOR GRANT OF APPROVAL TO ESTABLISH
SPECIALIZED INVESTMENT FUND (SIF)............................................................................................................ 486
B. APPLICATION FOR OVERSEAS INVESTMENTS ......................................................................................... 493
C. APPLICATION SEEKING APPROVAL OF MERGERS / CONSOLIDATION OF MF SCHEMES ............. 495
3. REPORTS ....................................................................................................................................................... 502
A. NEW SCHEME REPORT ................................................................................................................................... 502
B. COMPLIANCE TEST REPORT ......................................................................................................................... 506
C. HALF-YEARLY TRUSTEE REPORT ................................................................................................................ 534
D. MONTHLY CUMULATIVE REPORT ................................................................................................................ 540
E. ANNUAL STATISTICAL REPORT (ASR) ......................................................................................................... 547
F. DAILY TRANSACTION REPORT ....................................................................................................................... 548
G. REPORT TO TRUSTEES BY AMC ................................................................................................................... 551
H. TREATMENT OF CORPORATE ACTIONS ..................................................................................................... 564
I. FORMAT FOR OVERSEAS INVESTMENTS REPORT ................................................................................... 565
J. FORMAT FOR REPORTING OF ALL TRANSACTION IN DEBT AND MONEY MARKET SECURITIES 567
K. INVESTMENT VALUATION NORMS FOR MUTUAL FUNDS ...................................................................... 568
4. FINANCIALS ................................................................................................................................................... 569
A. HALF YEARLY FINANCIAL RESULTS FOR THE YEAR ENDED ................................................................. 569
B. ABRIDGED SCHEME-WISE ANNUAL REPORT FORMAT .......................................................................... 573
C. MONTHLY PORTFOLIO DISCLOSURE .......................................................................................................... 584
D. DISCLOSURE OF MONTHLY AAUM ................................................................................................................ 591
E. FORMATS FOR FINANCIAL STATEMENTS OF THE MUTUAL FUND SCHEMES AS PER INDIAN
ACCOUNTING STANDARDS (IND AS) ................................................................................................................. 594
F. INDICATIVE FORMAT OF HALF-YEARLY CONSOLIDATED ACCOUNT STATEMENT ......................... 610
5. STANDARD OFFER DOCUMENTS ............................................................................................................. 611
A. SCHEME INFORMATION DOCUMENT (SID) ................................................................................................. 611
B. STATEMENT OF ADDITIONAL INFORMATION (SAI) ................................................................................... 633
C. KEY INFORMATION MEMORANDUM (KIM) ................................................................................................... 643
D. INVESTMENT STRATEGY INFORMATION DOCUMENT (ISID) ................................................................. 651
E. MF LITE SCHEME INFORMATION DOCUMENT ........................................................................................... 671
F. KEY INFORMATION MEMORANDUM (KIM) OF SIF ...................................................................................... 681
G. STATEMENT OF ADDITIONAL INFORMATION (SAI) FOR SIF .................................................................. 688
6. STANDARD OBSERVATIONS ..................................................................................................................... 699
Page 464 of 748
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A. STANDARD OBSERVATION FOR SCHEME INFORMATION DOCUMENT (SID) .................................... 699
B. STANDARD OBSERVATIONS FOR STATEMENT OF ADDITIONAL INFORMATION (SAI) ................... 708
7. DISCLOSURES .............................................................................................................................................. 710
A. INDICATIVE FORMAT OF DISCLOSURE ON PERFORMANCE OF OTHER SCHEMES MANAGED BY
THE FUND MANAGER ............................................................................................................................................. 710
B. BROKERAGE AND COMMISSION PAID TO ASSOCIATES ......................................................................... 711
C. ROLE OF MUTUAL FUNDS IN CORPORATE GOVERNANCE OF PUBLIC LISTED COMPANIES ....... 712
D. DISCLOSURE OF INVESTOR COMPLAINTS WITH RESPECT TO MUTUAL FUNDS ............................ 713
E. FORMAT FOR DISCLOSURE OF TOTAL EXPENSE RATIO (TER) OF MUTUAL FUND SCHEMES .... 719
F. FORMAT FOR DISCLOSURE OF CALL OPTIONS WRITTEN ..................................................................... 720
G. REPORTING FORMATS FOR CREDIT DEFAULT SWAPS (CDS) ............................................................. 721
H. FORMAT FOR DISCLOSURE OF INFORMATION RATIO (IR) .................................................................... 722
8. FORMATS RELATING TO SEBI (PIT) REGULATIONS ............................................................................ 723
A. DISCLOSURES UNDER SEBI (PROHIBITION OF INSIDER TRADING) REGULATIONS, 2015 ............ 723
B. DISCLOSURES UNDER SEBI (PROHIBITION OF INSIDER TRADING) REGULATIONS, 2015 ............ 724
C. REPORT BY (NAME OF THE ASSET MANAGEMENT COMPANY/INTERMEDIARY/FIDUCIARY) FOR
VIOLATIONS RELATED TO CODE OF CONDUCT UNDER SEBI (PROHIBITION OF INSIDER TRADING)
REGULATIONS, 2015 .............................................................................................................................................. 725
9. MISCELLANEOUS FORMATS ..................................................................................................................... 727
A. FORM TO REPORT ON AI AND ML TECHNOLOGIES – TO BE SUBMITTED QUARTERLY INTIMATION
TO AMFI FOR THE USE OF THE AI AND ML APPLICATIONS AND SYSTEMS ............................................ 727
B. SYSTEM AUDIT EXCEPTION (OBSERVATION) REPORTING FORMAT ................................................. 728
C. FORMAT FOR TEMPLATE WITH RESPECT TO INTER SCHEME TRANSFERS .................................... 732
D. INVESTOR CHARTER FOR MUTUAL FUNDS .............................................................................................. 735
E. LETTER TO UNITHOLDERS IN CASE OF CHANGE IN CONTROL ............................................................ 743
F. DECLARATION FORM FOR OPTING OUT OF NOMINATION .................................................................... 747
10. REPORTING FORMATS FOR OFFSITE INSPECTION ......................................................................... 748
Page 465 of 748
Formats for Master Circular for Mutual Funds as on March 20, 2026
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1. REGISTRATION RELATED FORMS
A. APPLICATION FOR THE GRANT OF REGISTRATION OF MUTUAL FUND
Securities and Exchange Board of India (Mutual Funds) Regulations, 2026
(Regulation 3(a))
Name of applicant
Contact person
Name of the Compliance officer
Telephone No.
Fax No.
Instruction for filling up form:
1. Applicants must submit a completed application form together with appropriate supporting
documents to the Board.
2. It is important that this application form shall be filled in accordance with the regulations.
3. An application which is not complete is liable to be rejected.
4. Answers must be typed and legible.
5. Information which needs to be supplied in more details may be given on separate sheets which
should be attached to the application form.
6. The application must be signed by the competent person having authority to do so and all
signatures must be in original.
APPLICATION BY SPONSOR OF THE MUTUAL FUND FOR REGISTRATION
Sr. Particulars Details
No.
1. Name of the sponsor
Page 466 of 748
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2. Address of the registered office/correspondence
address
Telephone Nos.
Telex Nos.
Fax Nos.
3. Name of the contact person
4. Date and place of incorporation of the sponsor
(enclose a copy of certificate of incorporation)
5. Objects of the sponsor
(enclose copy of the Memorandum and Articles of
Association)
Main objects
Ancillary objects
6. Capital structure and shareholding pattern
7. Present line of business activities
Number of years in that line
8. Condensed financial information
(enclose balance sheets and profit and loss account for
five years)
9. Latest networth certificate from the statutory auditor
10. Accounting policies
(furnish description of significant accounting policies)
11. Systems and procedures
(furnish description of systems and procedures in the
company and essential internal controls in order to
carry on the business of the company)
Page 467 of 748
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12. Names of the associate organisations / group
companies/subsidiaries, etc.
13. Management of the sponsor
Board of the company with names, experience,
qualification, and profession of the Directors
Names of key personnel
Organisational structure
Board of Directors of associate organisations,
companies and subsidiaries
14. Names and addresses of the bankers of the sponsor
15. Names and addresses of the auditors of the sponsor
16. Court cases/litigations in which the sponsor may have
been involved in the last three years
17. An application for registration of mutual fund shall be
accompanied by a copy each of
(A) Draft trust deed;
(B) Draft investment management agreement; and
(C) Draft custodian agreement
CONDENSED FINANCIAL INFORMATION
(A) Income statement
Years (Rs.)
(1 2 3 4 5)
Income:
Dividend
Trading
Page 468 of 748
Formats for Master Circular for Mutual Funds as on March 20, 2026
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Management Fee
Other income
Total
Expenses:
Director’s remuneration
Trusteeship fees
Custodian fees
Registrar’s fees
Other expenses
Total
Gross Profit
Depreciation
Net profit before tax
Tax
Profit after tax
Dividends
Retained earnings
(B) Assets and liabilities
Years (Rs.)
(1 2 3 4 5)
Assets:
Fixed Assets
Page 469 of 748
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Gross
Depreciation
Net value
Current assets
Investments*
Others (please specify)
Cash and bank balances
Less:
Current liabilities and
Provisions
Net worth
Represented by:
Issued and paid up capital
Free reserves
(excluding revaluation reserves)
Total
*Provide full particulars of investments
Page 470 of 748
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B. CERTIFICATE OF REGISTRATION
Securities and Exchange Board of India (Mutual Funds) Regulations, 2026
[Regulation 3(e)]
I. In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India
Act, 1992 (15 of 1992), read with the Securities and Exchange Board of India (Mutual Funds)
Regulations, 2026 made thereunder the Board hereby grants a certificate of registration to
.................... as a Mutual Fund.
II. Registration Code for the Mutual Fund is MF / / /.
Date....................
By order
Sd/-
For and on behalf of the
Securities and Exchange Board of India
*****
Page 471 of 748
Formats for Master Circular for Mutual Funds as on March 20, 2026
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C. TRUSTEESHIP OF THE MUTUAL FUND
Securities and Exchange Board of India (Mutual Funds) Regulations, 2026
[Regulation 11]
1. If the trusteeship of the mutual fund is with a trustee company, then please furnish the following
particulars
a. the draft articles and Memorandum of Association for approval
b. Objects of the trustee company
c. Board of Directors of the trustee company with age, experience and qualification
d. Key personnel
e. Systems and procedures, record maintenance, etc.
f. Names of auditors and bankers
2. If the trusteeship of the mutual fund is with a debenture trustee, bank, or financial institution then
please furnish the following particulars
a. Name of the Institution
b. Address/telephone/telex/fax Nos.
c. Name of the contact person
d. Background information i.e. (number of companies, trusts for which it has or has been acting
as trustees, names of those companies, trusts, number of years of experience as trustees,
total volume of business, trusteeship fee record for last three years, organisational
infrastructure to handle trusteeship function including record maintenance, computer facilities,
in case of debenture trustees also furnish the number of defaulting companies, number of
cases of default in payment of interest and principal and action taken by the debenture
trustees).
3. Draft trust deed: The draft trust deed should inter alia provide for
a. Responsibilities, obligations and rights of the trustees for the protection of the fund’s assets.
b. A statement that investments should be of the permitted kind and within set limits.
c. Responsibilities, obligations and rights of the fund manager, i.e., the asset management
company.
d. Policies for investments, creation, issue and cancellation of units, pricing and redemption of
units, listing of units in case of close-ended schemes, expenses of the fund including payment
of fees and distribution of income and gains and accounting.
Page 472 of 748
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e. Policies for disclosures of scheme objectives and investment objectives in offer documents
and advertisements and annual and half-yearly reporting requirements to the investors of
various schemes of the fund.
f. Right of the trustees to obtain necessary information from asset management company
besides obtaining a quarterly report from the asset management company.
g. Right to make spot checks on the asset management company regarding pricing of units and
payment into and out of the fund and proper accounting of the income of the fund and
charging of expenses as permitted, distribution as permitted.
h. Public availability of the trust deed.
4. Instructions for filling up the form.
(See Format No. 1A)
Page 473 of 748
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D. REGISTRATION OF ASSET MANAGEMENT COMPANY
Securities and Exchange Board of India (Mutual Funds) Regulations, 2026
[Regulation 15]
Sr. Particulars Details
No.
1. Name of the Asset Management Company
2. Proposed registered office/correspondence address
Telephone Nos.
Telex Nos.
Fax Nos.
3. Name of the contact person
4. Proposed objects of the asset management company
(enclose copy of the draft Articles and Memorandum of
Association for approval)
Main objects
Ancillary objects
5. (a) Proposed capital structure
(b) The net worth of the company to be represented by
(necessary auditors certificate to be furnished)
6. Proposed systems and procedures for the asset
management company (furnish description of systems
and procedures proposed in the company and essential
internal controls in order to carry on the business of the
company)
7. Names of the associate organisations/group
companies/subsidiaries, etc. of asset management
company
Page 474 of 748
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8. Management of the asset management company
Board of the company with names of the Directors,
experience, qualification and profession
Names of key personnel
Proposed organisational structure
Board of Directors of associate organisations,
companies and subsidiaries
In case asset management company is an existing company:
Sr. Particulars Details
No.
1. Name of the asset management company
2. Address of the registered office/correspondence
address
Telephone Nos.
Telex Nos.
Fax Nos.
3. Name of the contact person
4. Date and place of incorporation of the asset
management company
(enclose a copy of certificate of incorporation)
5. Objects of the asset management company
(enclose copy of the Memorandum and Articles of
Association)
Main objects
Ancillary objects
(the Memorandum and Articles of Association would
need the approval of SEBI and necessary amendments
Page 475 of 748
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shall have to be incorporated in the existing
Memorandum and Articles of Association)
6. Capital structure and shareholding pattern
(as of the latest date)
Net worth of the company
(as of the latest date)
To be represented by
7. Present line(s) of business activities
Number of years in that line
8. Condensed financial information
(enclose balance sheets and profit and loss account for
three years)
9. Accounting policies
(furnish description of significant accounting policies)
10. Systems and procedures
(furnish description of systems and procedures in the
company and essential internal controls in order to
carry on the business of the company)
11. Names of the associate organisations/group
companies/subsidiaries, etc.
12. Management of the asset management company
Board of the asset management company with names,
experience, qualification, profession of the Directors.
Names of key personnel
Organisational structure
Board of Directors of associate organisations,
companies and subsidiaries
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13. Names and addresses of the Bankers of the asset
management company
14. Names and addresses of the auditors of the asset
management company
15. Court cases/litigations in which the asset management
company may have been involved in the last three
years
16. Instruction for filling up the form
(See Format No. 1A)
CONDENSED FINANCIAL INFORMATION
The format of Condensed Financial Information as provided under Format No. 1A shall be referred.
*****
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E. BIO-DATA OF DIRECTOR OF AMC/ TRUSTEE COMPANY482
I. Identification:
1. Name:
2. Father’s name:
3. Date of birth:
4. Sex (Please tick): Male/Female
5. Present residential address:
6. Permanent address:
7. Appointment as Director of (Please tick): AMC / Trustee Co.
II. Educational Qualifications:
Experience (During last 10 years):
Name & Place of Position held Nature of job Period
Organization responsibilities
From – To
If retired more than 10 years back, please indicate last position held.
For AMC directors, details of professional experience in finance and financial services field
[Regulation 16(2)(a)]:
482 MFD/CIR /11/354/2001 dated December 20, 2001 & MFD/CIR/13/16799/2002 dated August 29, 2002
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III. Particulars of Present Directorship and Trusteeship:
Organization Name Any association with the Position held Nature of job Period From –
sponsor responsibilities To
IV. Relationship with Sponsor or AMC:
1. Are you associated with the sponsors or with any of its associate companies or Trustees in
any manner during the last 3 years?
2. Are you relative of sponsor or any of the directors of the sponsor company or relative of
associate directors of the AMC or the Trustee Company?
3. Do you have personal holding in AMC or are you a nominee of an entity having stake in AMC
or sponsor?
4. Have you been providing any professional service to the mutual fund, AMC, Trustee Company
or Sponsor?
5. Do you have any pecuniary relationship with the mutual fund, AMC, Trustee Company or
Sponsors?
V. Record of Regulatory Violations/Criminal Offence (if any):
1. Have you ever been convicted by a court for any criminal offence or any other offence involving
moral turpitude or fraud or have been found guilty of any economic offence at any time in the
past?
2. Has any organization of which you were an employee or director or over which you
exercise/exercised management or policy control ever been convicted of any criminal offence
or any criminal suit filed during your association with them?
3. Have you ever been found guilty by any court / regulatory body / self-regulatory organization
/ stock exchange for any offence related to securities market in India or abroad?
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4. Have you ever been associated with any organization as a director or an employee against
which SEBI had initiated action of suspension or cancellation of certificate of registration or
initiated action under Section 11(B) of SEBI Act or any prosecution launched for acts
committed during your association?
(If the answer to any of the above questions is in affirmative, please furnish details. Please disclose
any such pending proceedings also).
VI. Other Details: Achievements, Awards, Publications, etc.:
Declaration:
I affirm that all the information given above is true and complete to the best of my knowledge and
belief. I have been adequately briefed on my responsibilities and duties under SEBI (Mutual Funds)
Regulations, 2026 and agree to abide by the same. Regarding the information contained within
Paragraphs IV and V above, SEBI would be informed immediately on any changes.
Signature:
Name:
(New/Proposed Director)
Date:
Place:
For Use of Trustees:
1. Mr. / Ms. ------------------------- who is appointed / proposed to be appointed as a director of
AMC/Trustee Co. is a fit and proper person as per criteria specified in Schedule II of SEBI
(Intermediaries) Regulations, 2008.
2. In case of Chairman/ Director including independent director of AMC, he is not a trustee of
any mutual fund (Regulation 16(2)(d))
3. In case of a Trustee, he is not on board of any other AMC or Trustee Co. of any mutual fund.483
4. After his induction, the board would consist of the following members
Member’s name Status (associate / independent)
483 SEBI/IMD/CIR No.14 /84243/07 dated January 15, 2007
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1.
2.
3….
5. (i) The trustees were discerning in the appointment of this director (Regulation 12(5)(e)(i)).
(ii) The independent directors of the trustees and AMC have paid specific attention in the
selection and nomination of this director (Regulation 12(5)(f)).
(iii) The director does not have any material pecuniary relationship with the mutual fund, AMC,
Trustee Company or Sponsor which in the judgment of the Trustee may affect independence
of Director (applicable in case of independent directors also.)
6. SEBI would immediately be informed on any changes pertaining to Paragraphs IV and V in the
Bio-Data and other requirements as specified in Regulations would be complied with.
Signature:
Name:
(Trustee Authorized by the Board of Trustees)
Date:
Place:
*****
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F. BIO-DATA OF KEY PERSONNEL484
I. IDENTIFICATION
1. Name :
2. Fathers’ Name :
3. Date of Birth :
4. Sex :
5. Present Residential
Address :
6. Permanent Residential
Address :
II. EDUCATIONAL
QUALIFICATIONS :
III. EMPLOYMENT DETAILS :
a) Current Employer
1. Name of employer :
2. SEBI Regn. No. of employer :
3. Regd. Office of employer :
4. Address of office where employed :
484 IIMARP/MF/CIR/05/788/97 dated April 28, 1997
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b) Ten year history of employment starting with current employment:
NAME OF DESCRIBE PRIMARY OTHER REPORTING
THE
FUNCTIONS RESPONSI- RESPONSIBI- RELATIONSHIP
EMPLOYER
BILITIES LITIES
with period of
association
IV. OTHER BUSINESS
1. Brief Description of any other business, full time or part time in self name or in name of close
relative (parent-spouse-child):
2. Details of business of close relatives:
V. RECORD OF REGULATORY VIOLATIONS/CRIMINAL OFFENCE (IF ANY):
(i) Have you ever been convicted by a court for any criminal offence? : Yes / No
(ii) Have you ever been convicted by any court or authorised body for any offence related to
the securities industry? : Yes / No
(iii) Have you or any organisation over which you exercised management or policy control
ever been convicted of any criminal offence? : Yes / No
(iv) Are there any proceedings against you or any organisation over which you exercised
management or policy control? : Yes / No
(v) Have you been accused of or convicted for any offence by a regulatory of the securities
or financial industry, a self-regulatory organization, stock exchange in India or from any
foreign country? : Yes / No
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(vi) If the answer to any of the following questions is yes, please furnish details. N.A.
OATH OVER SIGNATURE
I affirm that I have read and understood the items in this form and that my answers including
attachments are true and complete to the best of my knowledge and belief. I understand that I may
be subject to administrative, civil or criminal liabilities if I give false and misleading answers.
Date: Signature of applicant
Name of the applicant
(in block print)
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Certificate from the Employer
The information provided by the applicant is currently true and complete to the best of our knowledge
and belief. We have taken appropriate steps to verify the accuracy and completeness of the
information contained in this application.
I agree to update this form by causing an amendment to be filed on a timely basis whenever changes
occur to answers previously reported. Further, to the extent that information previously given is not
amended, the information provided in this form is currently accurate and complete.
Date: Signature of appropriate signatory
Name of appropriate signatory
(in block letters)
Name and Regn. No. of Organisation
*****
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2. APPLICATION FORMS
A. FORMAT OF APPLICATION BY MUTUAL FUNDS FOR GRANT OF APPROVAL TO
ESTABLISH SPECIALIZED INVESTMENT FUND (SIF)
Instruction for filling up form: -
1. Applicants must submit a completed application form together with supporting documents to
the Board.
2. This application form should be filled in accordance with the SEBI (Mutual Funds) Regulations,
2026 and circulars issued thereunder.
3. An incomplete application shall be liable to be rejected.
4. All entries by AMCs must be typed and legible.
5. In case any further details are required to be submitted, the same shall be given on separate
sheets attached to the application form.
6. The application must be signed by the competent person having authority to do so and all
signatures must be in original.
1. Proposed brand name of the SIF
2. Name of Mutual Fund
3. Assets Under Management (AUM) over Financial Year Amount (In
the preceding 3 years certified by (FY) Crore)
scheme statutory auditor.
Average AUM- ……. crore
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4. Details of action initiated or taken Provide complete information of the
against the sponsor/AMC under action taken/ initiated and the current
section 11, 11B, and/or Section 24 of status of the same.
the SEBI Act, 1992 during the last 3
years
5. Details of Chief Investment Officer Name of CIO:
(CIO) proposed to be appointed for SIF
in case applicant opts Route 2
Qualification:
Average AUM managed by the CIO
Experience in fund management (brief):
Details need to be mentioned in bio data to
be submitted in the prescribed format.
Please mention the value of assets
managed by CIO on behalf of clients in
India/ abroad, provided the said assets are
regulated by a financial regulator and/or
such assets are located in a country that is
a member of Financial Action Task Force
(FATF) and a country that is a signatory to
International Organization of Securities
Commission's (IOSCO) Multilateral
Memorandum of Understanding (MMOU).
6. Details of additional fund manager to Name of Fund Manager:
be appointed for SIF in case applicant
opts Route 2
Qualification:
Experience in fund management (brief):
Details need to be mentioned in bio data to
be submitted in the prescribed format.
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Average AUM managed by the Please mention the value of assets
additional fund manager managed by fund manager on behalf of
clients in India/ abroad, provided the said
assets are regulated by a financial
regulator and/or such assets are located in
a country that is a member of Financial
Action Task Force (FATF) and a country
that is a signatory to International
Organization of Securities Commission's
(IOSCO) Multilateral Memorandum of
Understanding (MMOU).
Appendix:
1. Rationale for compliance with the eligibility requirements
2. List of documents to be enclosed
Name ……………..
Designation – Authorised Signatory – ………………
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Appendix 1 to Format 2A:
Rationale for compliance with the eligibility requirements
…….. (name of the mutual fund) meets the requirements of the eligibility criteria stipulated in Route 1
(Sound Track Record)/ Route 2 (Alternate Route) for grant of approval to establish Specialized
Investment Fund (SIF), in accordance with Chapter 21 of Master Circular for Mutual Funds, as
mentioned below:
[ Route 1- Sound Track Record]
Regulatory Reference to Justification on how the Supporting Documents
Mutual Fund complies with (reference can be given to
SEBI Circular
the requirement the list of enclosures:
SEBI/HO/IMD/IMD
Appendix 2)
PoD1/P/CIR/2025/26 dated
February 27, 2025
Paragraph 21.1.1(a)(i)  Copy of certificate of
registration as mutual
Mutual Fund has been in
fund
operation for a minimum
period of 3 years and has an
average asset under
 Certificate from
management (‘AUM’) of not
Scheme Statutory
less than INR 10,000 crores,
Auditor on the average
in immediately preceding 3
Assets Under
years
Management over the
preceding 3 financial
years
Paragraph 21.1.1(a)(ii) Undertaking from the Trustee
Company of Mutual Fund
Details of action initiated or
taken against the
sponsor/AMC under section
11, 11B, and/or Section 24 of
the SEBI Act, 1992 during the
last 3 years.
[Route 2: Alternate Route]
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Paragraph 21.1.1(b)(i)(I)  Bio data of Chief
Investment Officer (CIO)
A Chief Investment Officer
in the prescribed format
(‘CIO’) for the SIF with an
experience of fund  Undertaking from the
management of at least 10 AMC on average AUM
years and has managed an managed by CIO
average AUM of not less than
 Self-certified undertaking
INR 5,000 crores
from the CIO on the
average AUM managed
Paragraph 21.1.1(b)(i)(II)  Bio data of Fund
Manager in the
An additional Fund Manager
prescribed format.
for the SIF with experience of
fund management of at least  Undertaking from the
3 years and has managed an AMC on average AUM
average AUM of not less than managed by Fund
INR 500 crores Manager
 Self-certified undertaking
from the Fund Manager
on the average AUM
managed
Paragraph 21.1.1(b)(ii) Undertaking from the Trustee
Company of Mutual Fund
Details of action initiated or
taken against the
sponsor/AMC under section
11, 11B, and/or Section 24 of
the SEBI Act, 1992 during the
last 3 years.
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Appendix 2 to Format No. 2A:
List of documents to be enclosed
Name of Document Particulars
Annexure xx Copy of certificate of registration as mutual fund
Route 1: Sound Track record
Annexure xx Certificate from Scheme Statutory Auditor on the average Assets
Under Management over the preceding 3 financial years
Annexure xx Undertaking from the Trustee Company of Mutual Fund regarding
action initiated/ taken against the sponsor/asset management
company (‘AMC’) under section 11, 11B, and/or Section 24 of the
SEBI Act, 1992 during the last 3 years.
Route 2: Alternate Route
Annexure xx Bio data of Chief Investment Officer (CIO) in the format prescribed for
‘Bio data of Key Personnel’ in SEBI Master Circular for Mutual Funds
along with identity proof.
Annexure xx Undertaking from the AMC that the CIO appointed for SIF has
managed an average AUM of not less than INR 5,000 crores.
Annexure xx Self-certified undertaking from the CIO that he/she has managed an
average AUM of not less than INR 5,000 crores.
Annexure xx Self-certified fit and proper person declaration by the CIO as per
Schedule II of the SEBI (Intermediaries) Regulations, 2008.
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Annexure xx Bio data of additional fund manager of SIF in the format prescribed for
‘Bio data of Key Personnel’ in SEBI Master Circular for Mutual Funds
along with identity proof
Annexure xx Undertaking from the AMC that the Fund manager appointed for SIF
has managed an average AUM of not less than INR 500 crores.
Annexure xx Self-certified undertaking from the Fund manager appointed for SIF
that he/she has managed an average AUM of not less than INR 500
crores.
Annexure xx Self-certified fit and proper person declaration by the fund manager as
per Schedule II of the SEBI (Intermediaries) Regulations, 2008.
Annexure xx Undertaking from AMC that it shall maintain a separate website/
dedicated webpage exclusively for SIF and that there would be clear
differentiation between the SIF’s offerings and the regular Mutual Fund
Offerings
Annexure xx Organizational structure of SIF indicating details of resources being
shared
Annexure xx Undertaking from the Trustee Company of Mutual Fund regarding
action initiated/ taken against the sponsor/asset management
company (‘AMC’) under section 11, 11B, and/or Section 24 of the
SEBI Act, 1992 during the last 3 years.
Page 492 of 748
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B. APPLICATION FOR OVERSEAS INVESTMENTS
PROPOSAL FOR INVESTMENTS IN ADRs/GDRs/ FOREIGN SECURITIES / OVERSEAS ETFs485
Name of the Mutual Fund:
SEBI Registration No.:
Amount Proposed to be Invested in ADRs
/GDRs /Foreign Securities / Overseas ETFs (in
US $)
Schemes of the Mutual Fund through which Name and Type of scheme(s)
investment is proposed
Whether the investment is consistent with the
Investment Objectives of the Scheme (s);
Whether the offer document(s) provides for
Overseas Investments and discloses the
attendant risks
Name and Address of the branch of the bank
through which Foreign Currency Transactions
are to be routed:
Details of all overseas service providers
proposed to be engaged including custodians,
specialised agencies etc.
(Details must include name & address, services
to be rendered, details of fee arrangement
proposed, whether their track record of
performance and regulatory compliance
considered, their valid registration with overseas
regulators details of experience/expertise,
assets under management/custody, etc.)
Declaration:
485 SEBI Cir No- IMD/CIR No 7/104753/07 dated September 26, 2007
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1. Boards of AMC and Trustees have exercised due diligence as required under Regulation 22(1)(b)
and Regulation 12(5)(e) of SEBI (Mutual Funds) Regulations, 2026 and Guidelines issued in this
regard.
2. Board of AMC and Trustees are satisfied that
i. The proposed investments in ADRs/GDRs issued by Indian or foreign companies or foreign
securities or overseas ETFs are consistent with the investment objectives of the above
mentioned scheme(s) and are in the interest of investors.
ii. The systems and procedures adopted by the AMC including the arrangements made with the
overseas service providers are adequate to support such investments and to safeguard the
interest of investors.
iii. The overseas service providers have sufficient experience, competence and a satisfactory
track record of performance and regulatory compliance.
3. A resolution to the above effect has been passed by the Boards of AMC and Trustees
on…(dates)
Place: Signatures
Name:
Date: Designation:
(Authorised by Trustees)
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C. APPLICATION SEEKING APPROVAL OF MERGERS / CONSOLIDATION OF MF
SCHEMES
Name of the AMC:
Proposal:
Rationale for merger/ consolidation:
Date of Application:
Part A- Basic Information of Merger/ s / Consolidation of MF scheme/ s
SI. Particulars Merging/ Merging/ Surviving/
Consolidating Consolidating Consolidated
No.
Scheme 1 Scheme/s ....... n Scheme
1. Name of the Scheme
2. Category of the
Scheme/s
3. ISIN details of
Scheme/s
4. Date of launch of
Scheme/s
5. Unclaimed Dividend
(IDCW) Amount with
no. of Investors
6. Unclaimed
redemption amount
with no. of Investors
7. Date of latest
reminder
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8. Number of KYC non-
compliant folios and
corresponding AUM
(RS.)
Part B- Consolidated list of Standard Observations Remarks (Yes/
No) and
Annexure No.
9. The application for merger/ consolidation is accompanied
with the following documents:
Requisite documents are placed as under:
1.1 The certified true copies of the resolutions passed
by Board of Directors of AMC, granting approval for
the captioned merger/ consolidation at its meeting
on DD/MM/YYYY;
1.2 The certified true copies of the resolutions passed by
\
Board of Directors of Trustee Company, granting
approval for the captioned merger/ consolidation at its
meeting on DD /MM/YYYY;
1.3 Draft of letter to be issued to the unitholders of the both
merging/ consolidating scheme/ s and surviving
scheme and draft notice cum addendum;
1.4 The list of the undertakings mentioned at Part D duly
signed by CEO/ CO.
10. Whether a new scheme emerges after
such consolidation/ merger.
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If yes, whether draft SID along with requisite fees and
draft of the letter to be issued to the unit holders of all
the concerned schemes is filed with SEBI.
11. Whether the letter to unitholders is as per AMFI prescribed
format communicated to the AMCs vide email dated April 24,
2023 and the contents of the letter to unitholders is in line with
SEBI (Mutual Fund) Regulations, 2026 and circulars and
guidelines issued thereunder.
12 Whether the confirmation regarding the interest of the
unitholders of surviving/ consolidated scheme is not adversely
affected is provided.
13. Whether in case of merger of closed ended debt/equity
schemes into open ended scheme or close ended scheme,
positive consent is required to be obtained from unit holders
of merging scheme and unit holders of surviving scheme
shall be given ·exit option without any exit load.
OR
Whether in all other cases the unit holders of merging
scheme and surviving scheme are provided with the exit
option to redeem their investments at prevailing NAV,
without exit load.
14. Whether the basis of allocation of new units by way of a
numerical illustration is provided in the draft letter to be
issued to the unitholders of the both merging/consolidating
scheme/s and surviving scheme.
15. Whether the percentage of total exposure to securities
classified as below investment grade or default and
percentage of total illiquid assets to net assets of each
individual scheme(s) as well the consolidated schemes are
provided in the draft letter to be issued to the unitholders of
the both merging/ consolidating scheme/ s and surviving
scheme.
16. Any other disclosure as specified by the Trustees.
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17. Any other disclosure as directed by the Board.
INSTRUCTIONS:
18. Ensure that the soft copy of application along with the
annexures will be mailed on the same day of filing of physical
copy with SEBI.
19. Ensure that the Statement of changes, if any, is filed along
with all the communication subsequent to filing of the
application.
-Signed-
CO / CEO
Part C: Disclosure of any deviations from applicable SEBI circulars and
guidelines and best practices:
SI. SEBI Regulations, Deviation Rationale for Point no. in
No Circulars and the deviation. letter to
Guidelines the
unitholders
-Signed-
CO / CEO
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Part D: The requisite undertaking/s confirming the following requirements, duly
signed by CEO/CO, are submitted along with the application.
i. Post-merger/ consolidation, the interest of all the concerned unitholders under the
merging scheme/s/ consolidating and Surviving Scheme will be protected;
ii. Post- merger/ consolidation, the Surviving/ consolidated Scheme will not be similar
to other existing schemes of the Mutual Fund;
iii. There shall be no changes to the features of the Scheme apart from the provisions
stated in the draft Notice-cum-Addendum and letter to Unitholders;
iv. Compliance with (relevant paras) of SEBI Master Circular for Mutual Funds on
consolidation and merger of schemes, SEBI (Mutual Funds) Regulations, 2026, any
other directives/ provisions in this regard;
v. The name and Asset allocation of the Transferee Scheme is in accordance with the
categorization Circular;
vi. The details of the proposed changes will be updated at the relevant pages of Scheme
Information Document ("SID") and Key Information Memorandum ("KIM") of the Surviving
Scheme;
vii. The expenses related to the proposed changes and other consequential changes
will not be charged to the unitholders of the schemes;
viii. The details of unclaimed IDCW and unclaimed Redemption in Merging/
consolidating Scheme and/ or in Surviving Scheme will be shared with the
unitholders of the concerned schemes;
ix. Letter to the unit holders will be updated with latest portfolio disclosures of the
concerned schemes before issuance of the same;
x. Merger/ consolidation of the Scheme is considered as a change in Fundamental
attributes of both the schemes i.e. Merging/ consolidating Schemes and surviving
scheme. Accordingly, notice and Letter to Unit holders will be sent to the investors
of both these Schemes.
OR
Merger/ consolidation is not seen as change in fundamental attribute of the surviving
as Fundamental attributes of the surviving scheme do not change and mutual funds
are able to demonstrate that the circumstances merit merger/ consolidation of
schemes and the interest of the unit holders of surviving scheme is not adversely
affected.
xi. Written communication (including digital modes such as emails/sms etc.) about the
proposed change is sent to each unitholder.
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xii. The unit holders of merging/ consolidating scheme/ s and surviving scheme shall be
given an option to exit at the prevailing Net Asset Value without any exit load;
xiii. Records as required under (relevant clause) of SEBI Master Circular for Mutual Funds,
including Records of dispatch of the letters/ communication to the unitholders giving
them the option to exit at prevailing NAVs without exit loads and the responses received
from them will be maintained.
xiv. A report giving information on total number of unit holders in the schemes and their net
assets, number of unit holders who opted to exit and net assets held by them and number
of unit holders and net assets in the surviving/ consolidated scheme shall be filed with
the Board within 21 calendar days from the date of closure of the exit option.
xv. The letter to unit holders shall be issued only after the final observations communicated
by SEBI have been incorporated and final copies of the same have been filed with SEBI.
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3. REPORTS
A. NEW SCHEME REPORT 486
NAME OF THE MUTUAL FUND:
I. SCHEME DETAILS:
A. Scheme Name:
B. Scheme Type( ) : as per SID
C. Date of Opening:
D. Date of Closing of Scheme/
Initial Subscription Period/ Transaction Period :
E. Maximum Subscription Amount
acceptable as per Offer Document :
F. Minimum Target Amount to be raised (Rs) :
II. SUBSCRIPTION / ALLOTMENT DETAILS
1. No. of applicants :
 Direct -
 Broker -
2. No. of applicants rejected & their total value (Rs):
3. NFO expenses incurred (Rs) :
4. Subscription Received (Rs) :
 Direct -
 Broker -
5. Allotment Date :
6. Listing (Names of stock exchanges) :
III. DATE OF DESPATCH OF REFUND ORDERS
(If subscription received is less than minimum target amount to be raised).
486 SEBI/ MFD/CIR/ 09/247/02 dated July 23, 2002, SEBI/ MFD/CIR/ 12/ 16588 /02 dated August 28,2002 & SEBI/IMD/CIR No.
13/118899/08 dated February 29, 2008
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IV. UNIT HOLDING PATTERN
Sr.No. Unit holding No. of Unitholders No. of units held Holding as % of
pattern net asset
Direct Broker Direct Broker Direct Broker
1 Individuals
2 NRIs/OCBs
3 FIIs
4. Corporates/
Institutions/
Others
TOTAL
V (a) COMMUNICATION TO THE UNITHOLDERS
Please confirm whether the number of investors holding more than 25% of the net
assets of the scheme and total holdings by such investors in percentage terms have
been communicated to all unit holders through allotment letters/ account statements:
Yes/ No
(b) DISTRIBUTION SCHEDULE
If any unit holder is holding more than 25% of the net assets of the scheme, please give the
following details:
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Sr. Name of Classification (Individuals, Address No. of Holding as
No the unit NRIs/OCBs, FIIs, units % of net
holder Corporate/Institutions/Others held asset
)
1
2
TOTAL
VI. GEOGRAPHICAL DISPERSION
1. Please list state wise geographical dispersion of unit holders in the following format:
Sr. Name of the Mode of No. of unit Amount mobilised as % of
No. State Entry holders total assets mobilised
1 Direct
Broker
2 Direct
Broker
Direct
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Broker
TOTAL Direct
Broker
2. Total number of cities from which subscriptions have been received:
VII. DETAILS OF TOP TEN AGENTS/DISTRIBUTORS
Please list names of top ten agents/distributors in the descending order of commission paid in the
following format:
Sr. No. Name of Amount mobilized in Rs. Commission paid Rs. Cr
Agent/Distributors Cr.
1
2
TOTAL
Name and Signature of the Compliance Officer/Authorised Signatory:
Date:
Instructions 1. Broker implies broker/agent/distributor
2. Give all amounts in Rs. Crore
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B. COMPLIANCE TEST REPORT 487
[Compliance Tests for Mutual Funds regulated by SEBI under SEBI (Mutual Funds) Regulations,
2026 (MF Regulations) and Circulars issued thereunder]
1. AMC shall submit CTR on the activities of Mutual Funds/AMC to SEBI within 21 calendar days
from the end of respective quarters (March, June, September and December).
2. AMC need to mention ‘Yes’/’No’ with respect to each compliance item and wherein there is non-
compliance and AMC has mentioned ‘No’, details regarding the nature of non-compliance shall
be given along with the corrective action taken, if any.
3. Anything given in the format shall not be interpreted as modification of any MF Regulations or
Circulars issued thereunder.
4. AMC shall also report any other compliances as prescribed by SEBI from time to time.
5. The Format is indicative only. Any other non-compliances during the period over and above the
regulations/clauses specified in the format shall also be reported by AMC.
Compliance Test Report for the Quarter end…
Name of the Mutual Fund :
Name of the Asset Management Company :
Name of the Chief Compliance Officer :
I. General Compliance Test
II. Investment Compliance Test
III. Investor Services Compliance Test
487 SEBI Circular No SEBI/HO/IMD/IMD-I DOF2/P/CIR/2021/550 dated April 12, 2021
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I. General Compliance Test
Sl. No. Regulations Particulars Remarks488
1. Regulation 12(5)(f) The independent directors of the trustee
company and asset management company
shall exercise oversight on clause (i) to (vii)
of this sub regulation.
2. Regulation 16(3) Networth of the AMC is computed as per the
definition under regulation 2(1)(ll) and the
networth is more the regulatory requirement
of INR 10 Cr./ 50 Cr./ 100 Cr. Further, the
networth is maintained on a continuous basis.
3. Regulation 21(a) The asset management company is not
acting as a trustee of any mutual fund.
4. Regulation 21(b) The asset management company is not
undertaking any other business activities
other than in the nature of management and
advisory services provided to pooled assets
including offshore funds, insurance funds,
pension funds, provident funds, or such
categories of foreign portfolio investor subject
to the conditions specified by the Board from
time to time. Such activities are not in conflict
with the activities of the mutual fund.
5. First proviso to If the asset management company may itself
Regulation 21(b) or through its subsidiaries undertake
activities as mentioned in clause (b) of
regulation 21, provided the conditions laid
under paragraph (i) to (viii) of the first proviso
are satisfied.
488 (Indicate ‘Yes’ if complied with the MF Regulations and various circulars issued thereunder and ‘No’ for non-compliance). Further, in
case of non-compliance, kindly provide the details regarding the non-compliance and the corrective action(s) taken, if any.
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6. Second proviso to The asset management company may, itself
regulation 21(b) or through its subsidiaries, undertake
portfolio management services and advisory
services for other than broad based fund till
further directions, as may be specified by the
Board, subject to compliance with the
following additional conditions:
(i) it satisfies the Board that the key
personnel of the asset management
company, the systems, back office, bank and
securities accounts are segregated activity
wise and there exist systems to prohibit
access to inside information of various
activities.
(ii) it meets the capital adequacy
requirements, if any, separately for each such
activity and obtain separate approval, if
necessary, under the relevant regulations.
7. Third proviso to An asset management company may
regulation 21(b) become a proprietary trading member for
carrying out trades in the debt segment of the
recognised stock exchanges, on behalf of its
mutual fund schemes and may also become
a self-clearing member of the recognised
clearing corporations to clear and settle
trades in the debt segment on behalf of its
mutual fund schemes.
8. Regulation 22(1)(a) The asset management company has taken
all reasonable steps and has exercised due
diligence to ensure that the investment of
funds pertaining to any scheme is not
contrary to the provisions of these regulations
and the trust deed.
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9. Regulation 22(1)(b) The asset management company shall
exercise due diligence and reasonable care
in all investment decisions consistent with the
standards of other entities engaged in the
same business.
10. Regulation 22(8) (a)(i) The asset management company shall be
responsible for acts of commission or
omission by its employees or persons whose
services have been procured by the asset
management company, where such act or
omission is committed in the
course of carrying out functions under these
regulations, and involves negligence, breach
of duty, or failure to comply with applicable
law.
11. Regulation 22(7)(a)(i) The asset management company has
submitted to the trustees Quarterly Reports
(QRs) of each year on its activities and the
compliance with the MF Regulations.
12. Regulation 22(5)(b)(i) Where an asset management company
proposes to utilise the services of the sponsor
or any of its associates, employees or their
relatives, for the purpose of any securities
transaction, distribution and sale of
securities, the proposed
engagement of such persons shall be
disclosed to the unitholders and the
brokerage or commission paid shall be
disclosed in the half-yearly and annual
accounts of the mutual fund.
13. Regulation The Mutual Fund has disclosed in the half
22(5)(b)(ii) yearly & yearly accounts:
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a. subscription by the schemes in the
issues lead managed by associate
companies; and
b. subscription to any equity or debt
issue on a private placement basis
where the sponsor or its associate
companies acted as arranger or
manager.
14. Regulation 22(7) (b) The asset management company shall file
(iii) with trustees the details of transactions in
securities by its key personnel in their own
name or in the name of the asset
management company, and shall report to
the Board, as required.
15. Regulation If the asset management company enters
22(5)(b)(iii) into any securities transactions with any of its
associates, a report to that effect shall be
placed before the trustees at their next
meeting.
16. Regulation 22(6) If the investment made by any company in a
scheme exceeds five per cent of the net asset
value of the scheme, the investment made by
that scheme or by any other scheme of the
same mutual fund in that company or its
subsidiaries shall be brought to the notice of
the trustees by the asset management
company and be disclosed in the half-yearly
and annual accounts of the respective
schemes, with justification for such
investment, where the cross investment is
made within a period of one year before or
after the initial investment.
17. Regulation 22(7)(b)(i) The asset management company has filed
with the trustees and SEBI the following:
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a. detailed bio-data of all its directors, along
with their interest in other companies, within
15 calendar days of their appointment;
b. a half yearly report regarding any change
in the interest of directors; and
c. a quarterly report to the trustees providing
details and adequate justification about the
purchase and sale of securities of the group
companies of the sponsor or the asset
management company by the mutual fund
during that quarter.
18. Regulation 22(7)(b)(ii) The directors of the AMC shall file the details
of transactions in securities with the Trustees
on quarterly basis.
19. Regulation 5(4) The asset management company has not
appointed any person as key personnel who
has been found guilty of any economic
offence or involved in violation of securities
laws.
20. Regulation 22(9)(a)(i) The asset management company has
appointed registrars and share transfer
agents who are registered with the Board.
21. Regulation 22(9)(a)(ii) If the work relating to the transfer of units is
processed in-house, the charges at
competitive market rates may be debited to
the scheme and for rates higher than the
competitive market rates, prior approval of
the trustees shall be obtained and reasons for
charging higher rates shall be disclosed in the
annual accounts.
22. Regulation The asset management company has abided
22(8)(a)(ii), by the Code of Conduct as specified in Part
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22(4)(a)(iv) and A & Part B of the Fourth Schedule of MF
22(4)(b)(ii) Regulations.
23. Regulation 22(3) (c) The asset management company shall not
invest in any of its scheme other than as
provided in clause (a) unless full disclosure
of its intention to invest has been made in the
offer
documents.
24. Regulation 22(3) (d) The asset management company shall not
charge any fees on its own investments in a
scheme of a mutual fund managed by it.
25. Regulation 22(9)(f) The asset management company shall not
carry out its fund management operations or
execution of transactions relating to mutual
funds, outside the territory of India, except for
execution of trades for investment in
overseas securities.
26. Regulation 22(9)(b)(i) The asset management company shall
compute and carry out valuation of
investments made by its scheme(s) in
accordance with the investment valuation
norms specified in the Seventh Schedule,
and shall publish the same.
27. Regulation 22(9)(b)(ii) The asset management company and the
sponsor of the mutual fund shall be liable to
compensate affected investors and/or the
scheme for any unfair treatment to an
investor resulting from inappropriate
valuation.
28. Regulation The asset management company shall
22(9)(b)(iii) of read report and disclose all transactions in debt
with following SEBI
Circulars & provisions
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of Master Circular for and money market securities, including inter
Mutual Funds: scheme transfers, as specified by the
 SEBI/CFD/DIL/BON Board.
D/1/2006/12/12
dated December 12,
2006,
 SEBI/CBM/BOND/0
1/2007/01/03 dated
March 01, 2007,
 SEBI/CBM/BOND/
02/2007 /13/04
dated April 13,
2007,
 SEBI/IMD/DOF-
1/BOND/Cir-3/ 2009
dated July
31, 2009
 IMD/DOF-I/BOND/
174666/ 2009 dated
August 27, 2009,
 Paragraphs 10.2.3,
10.11 & 10.15 of the
Master Circular for
Mutual Funds
 SEBI/IMD/DOF-
1/BOND/Cir-4/2009
dated October 16,
2009,
 CIR/IMD/DF/6/2010
dated July 30, 2010,
 Chapter 13 of the
Master Circular for
Mutual Funds
 CIR/MRD/DP/10/20
14 dated March 21,
2014
29. Regulation 22(3) (a) The asset management company shall
invest such amounts in such schemes of the
mutual fund, based on the risks associated
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with the schemes, as may be specified by the
Board.
30. Regulation 27(1) The asset management company shall
provide to every unitholder an option to
nominate person (s), in such manner as may
be specified by the Board from time to time
31. Regulation 28 The advertisements by the asset
management company shall be in conformity
with the Advertisement Code as specified in
the Fifth Schedule.
The AMC has complied with each of the
clauses under Fifth Schedule and
Paragraphs 6.7, 16.6 and Chapter 14 of
Master Circular for Mutual Funds while
releasing scheme specific advertisement,
sales literature, newsletters, web sites and
any other advertisement pertaining to the
mutual fund.
32. Regulation 25 (3) The offer document shall not contain any
disclosure or statement or opinion that is
false, misleading, or incorrect.
33. Regulation 29 (2) Every scheme wherein daily investment and
redemptions from the scheme is not
available, and such other schemes as
specified by the Board, shall be listed on a
recognised stock exchange in the manner as
may be specified by the Board from time to
time.
34. Paragraph 1.8 & 7.22 Disclosure of benchmark returns and review
of the Master Circular of performance of schemes by the Boards of
for Mutual Funds AMC and Trustees on a periodical basis.
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35. Chapter 16 of the Certification programme for
Master Circular for agents/distributors of mutual funds units and
Mutual Funds employees of mutual funds.
 SEBI Letter No.
OW/14970/2012
dated July 5, 2012.
36. Chapter 5 of the Risk Management System in areas of
Master Circular for operations like Fund Management,
Mutual Funds operations, customer service, market and
distribution, disaster recovery and business
contingency etc.
37. Paragraph 13.10 of Reconciliation of Government Securities.
the Master Circular for
Mutual Funds
38. Chapter 16 of the Registration of Intermediaries (Distributors).
Master Circular for
Mutual Funds
39. Paragraph 7.6 of the The AMC has complied with Investment /
Master Circular for Trading Guidelines by the employees of AMC
Mutual Funds and Mutual Fund Trustee Company.
40. Paragraph 16.7 of the Code of Conduct (Distributors).
Master Circular for
Mutual Funds
41. Paragraph 7.19 of the Minimum Number of Investors in Schemes/
Master Circular for Plans and minimum number of holdings by
Mutual Funds single investor.
42. Paragraph 9.4 of the Uniform cut-off timings for applicability of Net
Master Circular for Asset Value (NAV) of Mutual Fund
Mutual Funds scheme(s)/plan(s).
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43. Paragraph 9.1, 9.2 Time limit for updating NAV on AMFI / AMC
& 9.3 of the Master website.
Circular for Mutual
Funds
Prominently disclose the NAVs of all
schemes under a separate head on website
of the Fund and on the website of AMFI and
further, Mutual Funds to also extend facility of
sending latest available NAVs to unitholders
through SMS, upon receiving a specific
request.
44. Paragraph 14.4 of the Prohibition of Indicative Portfolios and Yields
Master Circular for in Mutual Fund schemes.
Mutual Funds
45. Paragraph 5.6 & Risk Management Framework for liquid
13.7 of the Master and Overnight Funds:
Circular for Mutual
Funds a. Liquid Funds and Overnight Funds
shall not park funds pending
deployment in short term deposits
of scheduled commercial banks.
b. Liquid Funds and Overnight Funds
shall not invest in debt securities
having structured obligations (SO
rating) and/ or credit
enhancements (CE rating).
However, debt securities with
government guarantee shall be
excluded from such restriction.
46. Regulation 21 (b) & The asset management company shall
Paragraph 22.2 of not undertake any business activities
the Master Circular other than in the nature of management
for Mutual Funds and advisory
services provided to pooled assets
including offshore funds, insurance funds,
pension funds, provident funds, or such
Page 516 of 748
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categories of foreign portfolio investor
subject to such conditions, as maybe
specified by the Board, from time to time,
if any of such activities are not in conflict
with the activities of the mutual fund.
47. Paragraph 5.6 & 5.7 Requirement of minimum holding of
of Master Circular atleast 20% of net assets in liquid funds.
for Mutual Funds
Requirement of minimum holding of
atleast 10% of net assets in all open
ended debt schemes.
48. Paragraph 13.11 of Guidelines with respect to Overseas
Master Circular for investment.
Mutual Funds
49. Paragraph 7.26 of Guidelines for votes cast by Mutual
Master Circular for Funds.
Mutual Funds
50. Paragraph 7.13 of Alignment of interest of Asset
Master Circular for Management Companies (AMCs) with
Mutual Funds the Unitholders of the Mutual Fund
Schemes
51. Paragraph 7.14 of Alignment of interest of Designated
Master Circular for Employees of Asset Management
Mutual Funds Companies (AMCs) with the Unitholders
of the Mutual Fund Schemes
52. SEBI Letter No. Compliance on monitoring social media
SEBI/HO/IMD- to identify the entities / groups which
II/IMD- camouflage themselves as registered
II_DOF11/P/OW/20 Mutual Funds or misuse the names of
22/0000060035/1 Mutual Funds
dated November 30,
2022
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53. SEBI letter to AMFI Details of compliance regarding
dated March 01, implementation of orders of SEBI and/or
2024 Tribunal/Court to SEBI in the prescribed
format
54. SEBI 2nd Institutional mechanism for identification and
Amendment deterrence of market abuse including front-
Regulation dated running and fraudulent transactions in
securities
August 01, 2024
read with SEBI
Summary of count of Level 2 alerts
Circular No.
generated and instances of potential
SEBI/HO/IMD/IMD-
market abuse along with action taken
PoD-
1/P/CIR/2024/107
dated August 05,
2024
55. SEBI letter No.
SEBI/HO/IMD/IMD_ Exceptions noticed in the internal audit
SEC- report
4/P/OW/2024/3209
3/1 dated October
10, 2024
Place:
Date:
Signature of the Chief Compliance Officer:
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II. Investment Compliance Test
S.N. Regulations Particulars Remarks489
1 Regulation 44 (1) read with Item No 2 under Restrictions with
Paragraph 13.1 of Master Circular for Mutual respect to single issuer
Funds limit.
2 Clause 1(a) of sixth schedule to Regulation Restrictions with
41(1) read with Item No. 3 under Paragraph respect to investment
13.1 of Master Circular for Mutual Funds in Unlisted debt
instruments and
Unrated debt
instruments.
3 Regulation 44(1) read with Item No 5 under Restrictions with
Paragraph 13.1 of Master Circular for Mutual respect to owning of
Funds paid up capital of any
company.
The Mutual Fund does
not own more than
10% of any company’s
paid-up capital
carrying voting rights
under all its schemes.
(If yes, give details of
the investments made
in excess of 10% of the
paid up capital of the
company in the
prescribed format
CR1)
4 Regulation 41(8) read with Paragraph 13.19 of Restrictions with
Master Circular for Mutual Funds respect to Inter
Scheme Transfers.
489 (Indicate ‘Yes’ if complied with the MF Regulations and various circulars issued thereunder and ‘No’ for non-compliance). Further, in
case of non-compliance, kindly provide the details regarding the non-compliance and the corrective action(s) taken, if any.
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(Give details of inter
scheme transfers
wherein there is non-
compliance in the
prescribed format
CR2)
5 Clause 3 of sixth schedule to Regulation 41(1) Restrictions with
read with Paragraph 13.14 of Master Circular respect to Aggregate
for Mutual Funds inter scheme
investments made by
all schemes.
(Give details of such
investments in the
prescribed format CR
3)
6 Clause 6 of sixth schedule to Regulation 41(1), Restrictions with
41(6), and 41(7) respect to:
a. Buy and sell
securities on
the basis of
deliveries.
b. Short Selling of
securities.
c. Derivative
transactions.
7 Clause 7 of sixth schedule to Regulation 41(1) Restrictions with
respect to purchase or
transfer of securities in
the name of the mutual
fund on account of the
concerned scheme
except in respect of
such securities as may
be specified by the
board from time to
time.
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8 Clause 8 of sixth schedule of SEBI (Mutual Restrictions with
Funds) Regulations, 2026 and Paragraph 13.7 respect to investments
of Master Circular for Mutual Funds in Short Term Deposits
of Scheduled
Commercial Banks.
9 Regulation 41(1) read with Item No 6 under Restrictions with
Paragraph 13.1 of Master Circular for Mutual respect of investment
Funds in:
a. Unlisted
security of an
associate or
group company
of the Sponsor.
b. Securities
issued by way
of private
placement by
an associate or
group company
of the sponsor.
c. Listed
securities of
group
companies of
the sponsor
which is in
excess of 25
per cent of the
net assets.
10 Clause 4 of sixth schedule to Regulation 41(1) Restriction with
respect to investment
in Fund of Funds
scheme.
11 Restriction with
respect to investment
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Regulation 41(1) read with Item No 1 under limit in the equity
Paragraph 13.1 and 13.4 of Master Circular for shares or equity
Mutual Funds related instruments of
any company.
[Give details of all
cases where the
investments have
exceeded the limit of
10% including the
exempted cases under
the proviso to Item No
1 under Paragraph
13.1 in the prescribed
format CR 4]
12 Clause 1 of sixth schedule to Regulation 41(1) Restriction with
respect to investments
in equity shares and
equity related
instruments in only
listed or to be listed
securities.
13 Clause 5 of sixth schedule to Regulation 41(1) Restrictions with
respect of investment
by Fund of Funds
scheme.
14 Restrictions with
Regulation 41(1) read with Paragraph 13.13 of respect of investment
Master Circular for Mutual Funds in the units of REITs
and InvITs.
15 Regulation 41(1) read with Paragraph 13.16 of Restrictions with
Master Circular for Mutual Funds respect of investment
in Exchange Traded
Commodity
Derivatives.
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16 Regulation 42(1) and 42(2) Restrictions with
respect to borrowings
by mutual fund.
(Give details of
borrowings by the
scheme wherein there
is non-compliance as
per the prescribed
format CR 5)
17 Regulation 42(3) Restrictions with
respect to loans by
mutual fund.
18 Regulation 42(4) Restrictions with
respect to lending and
borrowing of securities
borrowings by mutual
fund.
19 Regulation 41(2) and 41(4) read with Restrictions with
Paragraph 4.2 of Master Circular for Mutual respect to investments
Funds by a gold exchange
traded fund scheme
and silver exchange
traded fund scheme.
20 Restrictions with
Regulation 22(5)(a) respect to business
done through brokers.
(Give details of
transactions done
through such brokers,
by amount, as per the
prescribed format in
CR 6, please mark *
against the names of
associates.)
(Further, Inter scheme
transfer and direct
deals with the
companies should not
be included in the
aggregate transaction
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amount used as the
basis for the
computation of the
total business to the
brokers)
21 Disclosure
Regulation 22(6) requirements under
Regulation 25 (6) have
been complied with.
22 Regulation 41(1) read with Paragraph 3.6 of Restrictions with
Master Circular for Mutual Funds respect to investments
by Close ended debt
schemes and Interval
schemes.
23 Regulation 41(1) read with Item No 8 under Restrictions with
Paragraph 13.1 of Master Circular for Mutual respect to Sector Level
Funds Exposure.
24 Regulation 41(1) read with Item No 7 under Restrictions with
Paragraph 13.1 of Master Circular for Mutual respect to Group Level
Funds Exposure.
Place:
Date:
Signature of the Chief Compliance Officer:
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III. Investors Service Compliance Test
S Regulation Particulars Remarks490
No
1 Regulation The asset management company shall allow
35 (3) transfer of mutual fund units in the manner
as may be specified by the Board from time to
time.
2 Regulation The Income Distribution cum Capital
46(1) Withdrawal (IDCW) payments have been
dispatched to the unit holders within such
period as may be specified by the Board from
time to time..
(Give details wherein dividend warrants were
not dispatched within the timelines as per the
prescribed format CR 8).
3 Regulation The repurchase/redemption proceeds and
46(1)(ii) the application money, if the application is
rejected due to undersubscription,
oversubscription or for any other reason,
have been dispatched within such period as
may be specified by the Board from time to
time.
4 Regulation The AMC has paid interest @15% for the
46(2) period of delay in the event of failure to
dispatch the redemption or repurchase
proceeds or IDCW payments or application
money within the stipulated time. Details of
interest paid enclosed in the format specified
CR7 & CR8 below.
490 (Indicate ‘Yes’ if complied with the MF Regulations and various circulars issued thereunder and ‘No’ for non-compliance). Further, in
case of non-compliance, kindly provide the details regarding the non-compliance and the corrective action(s) taken, if any.
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(Give details wherein interest is required to be
paid for failure to dispatch the redemption or
repurchase proceeds within the stipulated
time as per the prescribed format CR 7).
Give details regarding the status of investor complaints forwarded by SEBI during the
quarter and at the beginning of the quarter period as per the following format :
Number of complaints Number of Number of Number of complaints
pending at the complaints complaints pending at the end of
beginning of the forwarded by redressed* the period
period. SEBI during during the
the period period
Give details regarding the status of investor complaints received directly by the mutual
fund during the quarter period as per the following format :
Number of Number of Number of Number of complaints
complaints complaints complaints pending at the end of
pending at the received during redressed* the period
beginning of the the period during the
period. period
* All complaints which have been fully resolved and a communication thereof has been
sent to the complainant shall be deemed to have been redressed.
Place
Date
Signature of the Chief Compliance Officer
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IV. Specialized Investment Funds (SIF)
S No Regulation Particulars Remarks
1 Regulation 49(1) Compliance with respect to minimum
investment threshold across all
investment strategies as stipulated under
Paragraph 21.4
2 Regulation 49(2)* Compliance with respect to provisions
related to NISM Certification Programme
for fund manager of SIF.
*Note1: This shall be
applicable as and when
specific certification
requirement is specified by
the Board.
3 Regulation 50(1) Investment strategies launched by SIF
are in compliance with the characteristics
stipulated under the MF regulations and
Paragraph 21.3.
4 Regulation 50(3) Compliance with respect to provisions
related to limitation on fees and
expenses
5 Item No. 2 under Restrictions with respect to single issuer
Paragraph 21.5 limit – debt instruments
6 Regulation 52 Restrictions with respect to investments
as per Paragraph 21.5
7 Item No. 3 under Restrictions with respect to owning of
Paragraph 21.5 paid up capital of any company.
8 Item No. 1 under Restrictions with respect to single issuer
Paragraph 21.5 limit – equity and equity-related
instruments.
9 Item No. 4 under Restrictions with respect to investments
Paragraph 21.5 in INVITs.
Page 527 of 748
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10 Regulation 52 Restrictions with respect to investments
in derivatives as per Paragraph 21.6
11 Regulation 53(1) Maintenance of clear product
differentiation
12 Regulation 53(2) Compliance with provisions relating to
branding, advertising (Paragraph 21.2)
13 Regulation 55 Disclosures in offer documents-
Compliance with respect to Paragraph
21.11
14 Regulation 55(2) and Compliance with provisions relating to
Paragraph 21.13.1 Portfolio disclosures
15 Paragraph 21.7 Compliance with respect to provisions
relating to subscription and redemption of
units of investment strategies and notice
Period for redemption
16 Paragraph 21.8.1 Compliance with respect to listing of units
of investment strategies
17 Paragraph 21.9 Compliance with respect to
benchmarking of investment strategies
18 Paragraph 21.10 Compliance with respect to provisions for
Distribution of Specialized Investment
Funds
19 Paragraph 21.12 Compliance with respect to risk band
20 Paragraph 21.13.2 Compliance with respect to disclosure of
scenario analysis
Page 528 of 748
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CR 1: Report of investment in Companies in excess of 10% of their paid up capital
carrying voting rights
Date Name of the Purchase Value (INR Holding as % of
Company Price lacs) company’s paid-up
capital carrying
voting rights
Signature of the Chief Compliance Officer
CR 2: Inter Scheme Transfers (ISTs)
Date Name of Name of Name of Details of Transfer Market rate Reasons
the the the (if of
Transferor Transferee company unquoted/ transfer
Scheme Scheme and type unlisted
of and basis
security of rate)
Quantity Rate Value
(INR
lacs)
Signature of Chief Compliance Officer
CR 3: Intra and Inter Scheme Investments
Investee Scheme Investor Scheme Total
investments
by schemes
Page 529 of 748
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as % of net
assets of the
investee
schemes*
Name Resource Name Net Investments Investment
s assets (INR lacs) as % of net
mobilised (INR assets
/ net lacs)
assets
(INR lacs)
Name
*Information to be given only in the case of intra scheme investments.
Signature of the Chief Compliance Officer.
CR 4: Details of investments in excess of the limits specified in Item No. (1) of
Paragraph 13.1 read with Paragraphs 6.27
(1) (2) (3) (4) (5) (6) * (7)
Sl. Schem Scrip Date/s of Holding in the Applicab Name &
N e violation/s (First scrip as a % of le limit closing
o and each of the the NAV of the value of
subsequent ones scheme, the
due to incremental consequent to benchmar
investments, if any) the investment k index /
sub-
index(if
applicable)
Page 530 of 748
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* For the sector /thematic schemes, the applicable (upper) limit is the weightage of the scrip
in the representative sectoral index/sub index or 10% of the NAV whichever is higher, as
specifically disclosed in the offer document.
For index funds/schemes, the upper limits shall be in accordance with the weightage
of the scrips as disclosed in the offer document
For all other schemes, the applicable upper limit for holding in each scrip is 10% of
NAV.
Signature of the Chief Compliance Officer
CR 5: Report on borrowings of Mutual Funds
Na Nature Sourc Pur Date Date of Rat Am Coll Am Am Ave
me of e pos of repaym e of ou ater oun oun rag
of instrum (Instit e borr ent of borr nt al t of t of e
the ents/ utions owin borrowi owi bor use inte inte Por
sch mode of / g ng ng ro d (if rest rest tfoli
em borrowi banks (specif we any bor bor o
e ngs / y the d ne ne Yiel
and other period as by by d
cat s) of % the AM duri
ego borrowi of Sch C ng
ry ng) net eme the
ass peri
ets od
Signature of the Chief Compliance Officer
CR 6: Report on transactions through Brokers
Name of the Value of Brokerage paid Broker wise % of gross
broker business (INR contracts business
(INR lacs)
lacs) outstanding for done
more than 60
days
Page 531 of 748
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Signature of Chief Compliance Officer
CR 7: Statement of Interest paid to the investors for delays in transfer of redemption/
repurchase proceeds491
Investor PAN/PEKRN Date of Date of Period of Amount of
Name of Investor Receipt of transfer of Delay Interest
Redemption/ Redemptio Paid (INR)
Repurchase
n/
Request
Repurchas
e
Signature of Chief Compliance Officer
CR 8
Statement of interest paid to the investors for delays in transfer of dividend payments492
Investor PAN/PEKRN Record Date Date of Period of Amount of
Name of Investor transfer of Delay Interest
Dividend Paid (INR)
491 SEBI Circular No. SEBI/HO/IMD/IMD-I DOF2/P/CIR/2022/161 dated November 25, 2022
492 SEBI Circular No. SEBI/HO/IMD/IMD-I DOF2/P/CIR/2022/161 dated November 25, 2022
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Signature of Chief Compliance Officer
(Annexure to the CTR can be as per the requirements to be reported)
Page 533 of 748
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C. HALF-YEARLY TRUSTEE REPORT 493
1. Trustees shall submit HYTR on the activities of Mutual Funds/AMCs to SEBI within two months
for the half year ended September and March along with summary of instances of non-
compliances in addition to the main report.
2. Anything given in the format shall not be interpreted as modification of any Regulations or
Circulars issued thereunder.
3. Trustees shall also report any other compliance/reporting requirements as prescribed by SEBI
from time to time.
4. The Format is indicative only. HYTR shall contain any other non-compliances during the period
over and above the Regulations/clauses specified in the format along with the corrective action(s)
taken by AMC and Trustees.
The report of the Trustees should give specific comments on the following:
1. Performance of schemes.
2. Activities of the AMC with specific reference to transactions with associates, concentration of
business with associate brokers, compliance with investment restrictions and net worth of the
AMC.
3. Ability of the AMC/sponsor to honour the guaranteed returns in case of any scheme
guaranteeing returns.
4. Deployment of funds of the scheme in accordance with investment objectives and not for any
option trading or short selling or carry forward transactions.
5. Valuation and pricing of units – whether in accordance with the Regulations and Master
Circular for Mutual Funds. Further, please provide instances where prices provided by
Valuation Agencies were not considered for valuation of securities along with justifications for
the same.
6. Publication of Annual Report and furnishing of half yearly and annual accounts to unit holders
and SEBI.
7. Listing of scheme on stock exchange as per terms of the scheme information document,
dispatch of account statement to unit holders within 5 working days from closure of New Fund
Offer and timely dispatch of repurchase/ redemption proceeds and dividend warrants.
8. Action taken on deficiency and warning letters issued by SEBI.
493 SEBI Cir No SEBI/HO/IMD/IMD-I DOF2/P/CIR/2021/550 dated April 12, 2021
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9. Before launch of scheme, AMC had systems in place for back office etc. appointed all key
personnel, auditors, compliance officer, prepared manual, specified norms, etc.
10. AMC shall appoint Registrar & Share Transfer Agents, who are registered with SEBI. If the
work is done in-house, then the rates charged must be competitive and for higher rates
reasons for charging higher rates must be disclosed.
11. AMC has been diligent in empanelling brokers, in monitoring securities transactions and
avoiding undue concentration with any broker.
12. AMC has not given undue and unfair advantage to any associate.
13. In case any company has invested more than 5% of NAV of scheme, an investment made by
the scheme or by any other scheme of the same mutual fund in that company or its subsidiaries
shall be justified.
14. Whether the AMC has dealt with any associate broker more than 5% of the quarterly business
done by a mutual fund.
15. In case the AMC has dealt through any other broker other than an associate broker in excess
of 5% or more of the aggregate purchase and sale of securities made by the mutual fund in
all its schemes, the AMC has recorded in writing the justification for the same and whether all
such investments have been reported to the trustees on a quarterly basis.
16. Utilisation of the services of the sponsor or any of its associates, employees, etc. by AMC –
whether disclosures made in the annual accounts.
17. Whether AMC submitted quarterly report on its activities and complied with Regulations.
18. Transactions of mutual fund are in accordance with the trust deed.
19. Funds pertaining to a scheme have been invested in accordance with the Regulations.
20. All activities of AMC are in accordance with the Regulations.
21. Details of transaction in securities by key personnel in their own name or in the name of the
AMC.
22. Whether AMC filed with the trustees detailed bio-data of all directors of AMC along with their
interest in other companies within 15 calendar days of their appointment and any change in
the interest of directors every six months.
23. Whether directors of the AMC filed with the trustees, a statement of holding of securities at the
end of each financial year along with dates of acquisition.
24. No conflict of interest between the manner in which the AMC has deployed its networth and
the interest of the unitholders.
25. Remedial steps, as necessary, taken by the trustees in case the conduct and business of the
mutual fund is not in accordance with the Regulations.
Page 535 of 748
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26. Certification that Trustees have satisfied themselves that there have been no instances of self-
dealing or front running by any of the trustees, directors and key personnel of the AMC.
27. Certification that AMC has been managing the schemes independently of any other activities
and the unitholders’ interest has been protected.
28. Comments of the independent trustee on the report received from the AMC regarding the
investments by the mutual fund in the securities of the group companies of the sponsor.
29. Confirmation that the mutual fund has not made any investment in - any unlisted security of
an associate or group company of the sponsor, any security issued by way of private
placement by an associate or group company of the sponsor or listed securities of group
companies of the sponsor which is in excess of 25% of the net assets of all the schemes of
the mutual fund.
30. Confirmation that the mutual fund transactions are only through dematerialised securities,
except for securities specified otherwise.
31. Whether unitholders’ consent obtained wherever necessary in accordance with Regulations.
32. Compliance with the Guidelines on recording of investment decisions and other related
compliances viz. investment in unlisted and privately placed securities, unrated debt
securities, securities classified as below investment grade or default, transactions where
associates are involved and the instances where there is poor performance of the schemes.
33. Compliance with respect to provisions related to investment/Trading in Securities by
Employees of Asset Management Companies and Mutual Fund Trustee Companies.
34. Compliance with respect to provisions related to AMFI/ NISM Certification Programme for
agents/ distributors and employees of AMC.
35. Compliance status on selection of Benchmarks for comparison of performance of schemes.
36. Compliance with respect to provisions regarding monitoring of compliance with Code of
Conduct for intermediaries.
37. Comments on the adequacy and outcome of risk management systems, including stress
testing results.
38. Compliance with reconciliation procedure for investment in Government Securities.
39. Compliance with respect to provisions related to registration of Intermediaries.
40. Compliance with respect to provisions related to minimum number of investors and maximum
holdings by a single investor in scheme / plan of mutual fund.
41. Compliance with respect to provisions related to uniform cut-off timings for applicability of Net
Asset Value (NAV) of Mutual Fund scheme(s)/plan(s), including declaration on whether the
Trustees are satisfied with the systems and procedures of the Mutual Fund designed for the
purpose of compliance with these Guidelines.
Page 536 of 748
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42. Compliance with respect to provisions related to parking of funds in short term deposits of
scheduled commercial banks pending deployment.
43. Compliance with respect to provisions of Risk Management Framework for liquid and overnight
funds.
44. Compliance of guidelines on overseas Investments by Mutual Funds.
45. Compliance with requirements of securities lending arrangement.
46. Compliance with requirements of simplification and updation of Offer Document and Key
Information Memorandum of Mutual Funds Scheme.
47. Compliance with respect to provisions related to prohibition on disclosure of Indicative
Portfolios and Yields in Mutual Fund schemes.
48. Whether the assets of Gold/Silver ETF are invested in gold/silver or gold/silver related
instruments as per the asset allocation mentioned in the Scheme Information
document.
49. Whether physical verification of gold/silver held in schemes was conducted by
statutory auditors.
50. Compliance with requirements for participation in repo in corporate debt securities.
51. Whether Mutual Fund/AMC has set apart at least 2 basis points on daily net assets within the
maximum limit of BER as per Regulation 66 of the Regulations for investor education and
awareness initiatives on annual basis and complete disclosures on the initiatives undertaken.
Further, whether Mutual Fund has made complete disclosures in the half yearly trustee report
to SEBI regarding the investor education and awareness initiatives undertaken.
52. Details of efforts undertaken by AMC to increase geographical penetration of mutual funds
and the details of opening of new branches, especially at locations beyond top 30 cities.
53. Compliance with requirements for participation of mutual funds in Credit Default Swaps (CDS)
Market.
54. Review and confirmation of Voting summary and scrutinizer’s comments, if any. Further, a
Confirmation whether Fund Managers/Decision makers have submitted a quarterly declaration
to the Trustees that the votes cast by them have not been influenced by any factor other than
the best interest of the unit holders.
55. Compliance with requirements of minimum Average AUM of Rs. 20 crore on half yearly rolling
basis in open ended debt oriented Schemes.
56. Stress testing of prescribed open-ended debt oriented schemes.
57. Exposure of a mutual fund, across all its schemes, towards individual issuers, group
companies and sectors.
Page 537 of 748
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58. Compliance with requirements with respect to Categorization and Rationalization of Mutual
Fund Schemes.
59. Compliance with requirements with respect to transparency and charging of Total Expense
Ratio (TER) in both direct and regular plans.
60. Compliance with requirements with respect to performance disclosure for Mutual Funds.
61. Compliance with guidelines on Segregated Portfolio.
62. Compliance with requirements with respect to Cyber Security and Cyber Resilience framework
for Mutual Funds / Asset Management Companies (AMCs).
63. Compliance with requirements of System Audit framework for Mutual Funds / Asset
Management Companies (AMCs). Further, Trustees should furnish the open item pertaining
to system audits.
64. Comments on securities classified as below investment grade or default
65. Compliance with requirements relating to Trade Execution and Allocation
66. Compliance with guidelines on Inter Scheme Transfers of Securities.
67. Compliance with requirements with respect to Policy on Internal Credit Risk Assessment at
the AMC and measures taken for the early warning signals (including yield-based alerts) on
deterioration of credit profile of the issuer.
68. Compliance with respect to monitoring the activities of their distributors, agents, brokers to
ensure that they do not indulge in any malpractice or unethical practice while selling or
marketing Mutual Fund units and reporting of any non-compliance with the Mutual Funds
Regulations and Guidelines pertaining to Mutual Funds especially guidelines on
advertisements and/ or sales literature and/or Code of Conduct in the periodic meetings of the
Board of the AMC and the Board of Trustees.
69. Trustees have abided by the Code of Conduct as specified in Part A of the Fourth Schedule.
70. Trustees have ensured that the Chief Executive Officer of AMC has complied with the
provisions of Regulation 22(4)(a).
71. Compliance with the requirement of standing arrangements with independent firms for special
purpose audit and/or to seek legal advice.
72. Whether the portfolio duration is reduced below the specified floors of 3 years and 4 years in
respect of Medium Term Fund and Medium to Long Term Fund respectively. Further, in case
of any deviation written justifications were placed before the Trustees.
73. Compliance with Alignment of interest of Asset Management Companies (‘AMCs’) with the
Unitholders of the Mutual Fund Schemes
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74. Compliance with alignment of interest of Designated Employees of Asset Management
Companies (AMCs) with the Unitholders of the Mutual Fund Schemes.
75. Compliance with the transparency requirement under Consolidated Account Statement.
76. Confirmation whether assets & liabilities, bank accounts and securities accounts of each
scheme are segregated and ring-fenced on daily basis during the half year.
77. Compliance with reporting of examined alerts under Institutional Mechanism by Asset
Management Companies for identification and deterrence of potential market abuse including
front-running and fraudulent transactions in securities.
78. Compliance with respect to Specialized Investment Fund:
a. Whether AMC has the necessary expertise, internal control systems and risk management
mechanism to invest in and manage investments as a Specialized Investment Fund;
b. Compliance with respect to minimum investment threshold;
c. Compliance with respect to fees and expenses in accordance with provisions of Regulation
66;
d. Whether Investment strategies launched by SIF are in compliance with the characteristics
stipulated in Regulations;
e. Compliance with investment restrictions as prescribed in Regulation and Circulars;
f. Compliance with respect to provisions concerning product differentiation;
g. Compliance with respect to disclosure requirements concerning SIF;
h. Compliance with respect to branding and advertising requirements;
i. Whether AMC has complied with other requirements related to risk management, investor
protection, disclosures and reporting
79. Any other matter the trustees would like to report to SEBI.
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D. MONTHLY CUMULATIVE REPORT 494
Part A – Mutual Fund
Name of the Mutual Fund:_________________
MCR for the month of _______ (Month), 20XX
Sr. Scheme Category No. of No. of Funds Repurchase/ Net Net Assets Average Net No. of Net Assets
No. schemes Folios mobilized Redemption Inflow Under Assets under segregated Under
as on as on for the for the period (+ve)/ Management Management portfolios Management
____ ____ period (Since April Outflow as on ____ for the _____, created as in segregated
(Since 01, 20XX to (-ve) for 20XX (Month on ____ portfolios as
April 01, _____) the INR in crore Year) on ______
20XX period
to____) INR in crore (Since INR in crore INR in crore
April
INR in 01,
crore 20XX to
_____)
INR in
crore
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
A Open ended
Schemes
I Debt Schemes
i. Ov ernight Fund
ii. Liq uid Fund
iii. Ultr a Short Term
Fund
iv. Ultr a Short to
Short Term Fund
v. Mo ney Market
Fund
vi. Sho rt Term Fund
vii. Me dium Term
Fund
viii. Me dium to Long
Term Fund
ix. Lon g Term Fund
x. Dyn amic Term
Fund
xi. Cor porate Bond
Fund
xii. Cre dit Risk Fund
xiii. Ban king and PSU
Debt Fund
xiv. Gilt Fund
xv. 10 year constant
maturity Gilt Fund
xvi. Flo ating Interest
Rates Fund
xvii. Sec toral Fund
Sub total - I
II Equity Schemes
494 SEBI Circular SEBI/HO/MD/DF3/CIR/P/2019/020 dated January 22, 2019 and SEBI/HO/IMD/DF3/CIR/P/2021/014 dated January 29,
2021
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Name of the Mutual Fund:_________________
MCR for the month of _______ (Month), 20XX
Sr. Scheme Category No. of No. of Funds Repurchase/ Net Net Assets Average Net No. of Net Assets
No. schemes Folios mobilized Redemption Inflow Under Assets under segregated Under
as on as on for the for the period (+ve)/ Management Management portfolios Management
____ ____ period (Since April Outflow as on ____ for the _____, created as in segregated
(Since 01, 20XX to (-ve) for 20XX (Month on ____ portfolios as
April 01, _____) the INR in crore Year) on ______
20XX period
to____) INR in crore (Since INR in crore INR in crore
April
INR in 01,
crore 20XX to
_____)
INR in
crore
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
i. Mu lti Cap Fund
ii. Lar ge Cap Fund
iii. Lar ge & Mid Cap
Fund
iv. Mid Cap Fund
v. Sm all Cap Fund
vi. Div idend Yield
Fund
vii. Val ue Fund
viii. Con tra Fund
ix. Foc used Fund
x. Sec toral Fund
xi. The matic Fund
xii. ELS S – Tax
Saver Fund
xiii. Fle xi Cap Fund
Sub total - II
III Hybrid Schemes
i. Con servative
Hybrid Fund
ii. Bal anced Hybrid
Fund
iii. Agg ressive
Hybrid Fund
iv. Dyn amic Asset
Allocation
v. Mu lti Asset
Allocation Fund
vi. Arb itrage Fund
vii. Equ ity Savings
Fund
Sub total - III
IV Life Cycle
Funds
i. Life Cycle Funds
Sub total - IV
V Other Schemes
i. Ind ex Funds
ii. Go ld ETFs
iii. Silv er ETFs
Page 541 of 748
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Name of the Mutual Fund:_________________
MCR for the month of _______ (Month), 20XX
Sr. Scheme Category No. of No. of Funds Repurchase/ Net Net Assets Average Net No. of Net Assets
No. schemes Folios mobilized Redemption Inflow Under Assets under segregated Under
as on as on for the for the period (+ve)/ Management Management portfolios Management
____ ____ period (Since April Outflow as on ____ for the _____, created as in segregated
(Since 01, 20XX to (-ve) for 20XX (Month on ____ portfolios as
April 01, _____) the INR in crore Year) on ______
20XX period
to____) INR in crore (Since INR in crore INR in crore
April
INR in 01,
crore 20XX to
_____)
INR in
crore
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
iv. Oth er ETFs
v. Fun d of funds
investing
overseas
Sub total - V
Total A-Open
ended Schemes
B Close Ended
Schemes
I Debt Schemes
i. Fix ed Term Plan
ii. Infr astructure
Debt Fund
iii. Oth er Debt
Scheme
Sub total - I
II Equity Schemes
i. ELS S
ii. Oth er Equity
Schemes
Sub total - II
III Other Schemes
Total B -Close
ended Schemes
C Interval
Schemes
I Debt Schemes
II Equity Schemes
III Other Schemes
Total C -Interval
Schemes
Grand Total
Page 542 of 748
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Name of the Mutual Fund:_________________
MCR for the month of _______ (Month), 20XX
Sr. Scheme Category No. of No. of Funds Repurchase/ Net Net Assets Average Net No. of Net Assets
No. schemes Folios mobilized Redemption Inflow Under Assets under segregated Under
as on as on for the for the period (+ve)/ Management Management portfolios Management
____ ____ period (Since April Outflow as on ____ for the _____, created as in segregated
(Since 01, 20XX to (-ve) for 20XX (Month on ____ portfolios as
April 01, _____) the INR in crore Year) on ______
20XX period
to____) INR in crore (Since INR in crore INR in crore
April
INR in 01,
crore 20XX to
_____)
INR in
crore
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Fund of Funds
Scheme
(Domestic)
Notes:
1. In column number (3), number of schemes shall include series / serial plans
2. In column number (3), segregated portfolios created in a scheme shall not be treated as a
separate scheme.
3. In column number (4), number of folios shall not include folios of segregated portfolios
4. In column number (8) and (9), AUM of segregated portfolios shall be included
5. In column number (9), AAUM is the average of the daily AUM of the Mutual Fund for the month.
6. In column number (10), number of segregated portfolios created in a scheme can be more than
one
7. Inter scheme investments are excluded from the above data
Instructions for Calculating AUM495
1. To have uniformity in calculating Net assets under management (NAUM) and average assets
under management (AAUM), the following methodology should be adopted.
 The AUM as on the last calendar day of each month shall be included in NAUM. In
liquid funds, purchases on the first day of the next month shall not be considered in
calculating NAUM for the current month.
495 SEBI/IMD/CIR No 3/124444/08 dated April 30, 2008
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 AAUM of the mutual fund shall be the aggregate of the daily AUM of the Mutual Fund
over calendar days in the relevant month irrespective of the date of allotment/maturity
of the scheme.
Additional Reporting format496 on the overseas investment by Mutual Funds/SIFs in ADRs/ GDRs,
foreign securities and overseas Exchange Traded Funds (ETFs)
Instruments Amount Invested Redemption Value of overseas
investments (as on
last date of the
month)
in terms In terms of US $ in terms In terms of US $ in terms of In
of Rs. of Rs. Rs. terms
of US
$
ADR/GDR
Equity of overseas
companies
Foreign debt securities
Government Securities of
AAA rated countries
Overseas ETFs
Units/securities issued by
overseas Mutual Funds
Number of Schemes investing in
foreign securities
Name of the country Amount invested
in terms of Rs. In terms of US $
* Conversion rate as on last date of the month. Adjustment of conversion of US $ into India Rupee as per
the RBI reference rate by Foreign Exchange Dealer Association of India (FEDAI)
496 SEBI/IMD/CIR No. 15/87045/2007 dated February 22, 2007
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Part B – SIF
Name of the SIF: ____
Name of the AMC: ___
MCR- SIF for the month of ____
No. N Fun Repurchas Net Net Avera No.o Net
of o. ds e/redempti Inflo Asset ge f asset
strat of mob on for the w(v under asset segr s
egie fol ilise period e) / mana s egat under
s as io d (since Outf geme under ed mana
on s for April 01, low( nt as mana portf geme
___ as the 20XX to -ve) on geme olio nt in
on peri ___) in Rs. for ____ nt for creat segre
S __ od cr the in Rs. the ed gated
r. _ (sin peri cr mont as portf
N Scheme Category ce od h on olios
o Apri (sin ____ ____ as on
. l 01, ce in Rs. ____
20X Apri cr in Rs.
X to l 01, cr
___) 20X
in X to
Rs. ___
cr ) in
Rs.
cr
(
1 (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
)
Equity Oriented
A Investment
Strategies
Equity Long-Short
i.
Fund
Equity Ex-Top 100
ii.
Long-Short Fund
Sector Rotation
iii
Long-Short Fund
Sub total - A
Page 545 of 748
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Debt Oriented
B Investment
Strategies
Debt Long-Short
i.
Fund
Sectoral Debt
ii.
Long-Short Fund
Sub total - B
Hybrid
C Investment
Strategies
Active Asset
i. Allocator Long-
Short Fund
Hybrid Long-Short
ii.
Fund
Sub total - C
Grand Total
(A+B+C)
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E. ANNUAL STATISTICAL REPORT (ASR) 497
This report is to be submitted each financial year in order to reach the Board latest by 30th of April.
NAME OF THE MUTUAL FUND: ______________________
Unitholding Pattern of Mutual Fund as on March 31, ______________
Category Number of Net Asset Value
Folios
(INR in crore)
Individuals
NRIs/OCBs
FPIs
Corporate/Institutions/Others
TOTAL
Note: Data is to be provided for all the schemes put together and not individual scheme-wise.
497 SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021
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F. DAILY TRANSACTION REPORT
To monitor trends of investment, mutual funds are required to submit details of transactions in
secondary market on daily basis in both soft and hard copies. Information must be submitted for the
total repurchases/ sales of equity/ debt and not for each individual scrip. Information on total
purchases/ sales of sensitive index scrips need not be sent.
Format and Specification of the Daily Transaction Report498
Operational notes on Reporting of transactions by registered Mutual Funds
DAILY REPORTS
1. The format of DTR, explanation of codes, field widths etc are enclosed in Format "2.F1" below.
2. The data as per DTR would be submitted in "TEXT" format with fields separated by "|" (i.e. a
pipe).
3. All transaction will have a unique transaction identification number which would be given by
the AMCs/custodians at their end.
4. In case of any change in transaction already reported to SEBI, such change can be reported
as amendment transaction with the following characteristics
a. Transaction type is to be reported as "A’
b. Transaction ID shall be the same as that of earlier reported transaction.
c. Correct details
In other words the system will cancel the earlier reported transaction and will only consider the
amended transaction for processing.
REPORTING TYPE - R_TYPE
N - New Transaction
A - Amendment in earlier transaction.
D - Deletion of earlier reported transaction.
General Aspects:
498 SEBI Cir No - MFD/CIR/07/384/99 dated December 17, 1999 and MFD/CIR/08/23026/99 dated December 23, 1999
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1. The date format to be used all the reports submitted to SEBI would be DD-MON-YYYY.
2. All Transaction values are In Crores.
3. The file names to be used for submitting the report in soft copies are
DTR: D<ddmm><3 char of Custodian code No>.txt
For e.g. Custodian code No: 001 for the date Dec 02
The file name would be D0212001.TXT
DTR (List and field description of codes in DTR)
SR. CODE EXPLANATION FIELD TYPE FIELD
NO. WIDTH
1 CUST_CODE CUSTODIAN CODE CHARACTER 3
2 TRN_ID UNIQUE CHARACTER 12
IDENTIFICATION
NUMBER
3 TRN_DATE TRANSACTION DATE CHARACTER 11
DD-MON-YYYY
4 REPORT_DT DATE OF REPORT CHARACTER 11
(DD-MON-YYYY
5 R_TYPE REPORTING TYPE CHARACTER 1
6 TOT_PUR_EQ TOTAL PURCHASE NUMBER (12,2)
(EQUITY)
7 TOT_SAL_EQ TOTAL SALES NUMBER (12,2)
(EQUITY)
8 TOT_PUR_DEBT TOTAL PURCHASE NUMBER (12,2)
(DEBT)
9 TOT_SAL_DEBT TOTAL SALES NUMBER (12,2)
(DEBT)
(1) NUMBER (12,2) -- Number with 10 integer and 2 decimal digits.
(2) All transaction values to be reported in crores.
Page 549 of 748
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Format of the text file:
File Name : D0212001
Cust_ MF Trn Trn. _dt Report _Dt R_Type Tot_Pur_Eq Tot_Sal
Code Reg. _ID _Eq
No.
C (3) C (12) C(12) 02-DEC- 02-DEC-1999 C(1) N(12,2) N(12,2)
1999
Tot_Pur_Debt Tot_Sal_Debt Tot_Pur_Eq_ Tot_Sale_
BSE Eq_ BSE
N(12,2) N(12,2) N(12,2) N(12,2)
A B C D E F
001|MF/001/93/1|ID01|02-DEC-1999|02-DEC-1999|N|2.25|5.23|20.55|66.12|39.1|2.3|
Amendment:
For e.g.
Original Record is
001|MF/001/93/1|ID01|02-DEC-1999|02-DEC-1999|N|2.25|5.23|20.55|66.12|39.1|2.3|
Suppose Tot_Pur_Eq has to be changed from 2.25 to 25.5 then the amended record would be
001|MF/001/93/1|ID01|02-DEC-1999|04-DEC-1999|A|25.5|5.23|20.55|66.12|39.1|2.3|
and reported on 4th December, 1999.
A: TOT_PUR_EQ
B: TOT_SAL_EQ
C: TOT_PUR_DEBT
D: TOT_SAL_DEBT
E: TOT_PUR_EQ_BSE (Sensitive Index out of A)
F: TOT_SAL_EQ_BSE (Sensitive Index out of B)
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G. REPORT TO TRUSTEES BY AMC 499
FORMAT FOR QUARTERLY REPORT (QR) FROM AMCs TO TRUSTEES
1. AMCs shall submit QR on the activities of Mutual Funds/AMCs to trustees within 21 calendar days
from the end of respective quarters (March, June, September and December).
2. The report shall, inter alia, contain the following details and shall contain such other
information/compliances as required by Trustees and / or as prescribed by SEBI from time to time:
(I) Details about the Schemes of the Mutual Fund
(i) Number of live schemes as on ____ (last day of the quarter end):
Type of Scheme Open Close Interval Total
ended ended
Overnight/Liquid/Money Market Funds
Gilt Funds
Debt Schemes
Infrastructure Debt Funds
ELSS
Other Growth / Equity Schemes
Hybrid Schemes
Life Cycle Funds
Other Schemes (including ETFs)
Total
Fund of Funds Schemes (Investing
overseas)
Fund of Funds Schemes (Domestic)
(ii) Details of Schemes launched during the quarter including schemes which were
launched but could not be constituted for any reason:
499 SEBI Circular SEBI/HO/IMD/IMD-I DOF2/P/CIR/2021/550 dated April 12, 2021
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Schem Scheme Open/ Date Closi Allot Subscription No. of Folios
e Name Categor Closed/ of ng ment Received (INR
y (As Interval Laun Date Date Cr.)
per ch
MCR)
Direct Regular Direct Regular
Plan Plan Plan Plan
(iii) Details of Existing Schemes Matured/ wound up during the quarter:
Scheme Scheme Category Open/ Amount Number Maturity/ Pay-
Name (As per MCR) Close/ redeemed of Unit- out Date * (for
Interval at the time holders wound up
of schemes)
maturity/
winding up
(INR Cr.)
For schemes which have been wound up, details of payout should be provided during each
quarter till the last payout for such schemes.
(iv) Details of Schemes merged during the quarter:
Merging Scheme Surviving Scheme Effective Exit
Date of Period of
Merger 30
Name Scheme Open/ Name Scheme Open/
calendar
of the Categor Close/ of the Category Close/
days
Schem y (As per Interval Schem (As per Interval
e MCR) e MCR) From:
To:
Page 552 of 748
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(v) Details of close-ended Schemes Rolled-over during the quarter:
Schem Scheme Category Original Date of Period Extende Amount
e Name (As per MCR) Maturity Roll over of Roll d Rolled Over
Date over Maturity (INR Cr.)
Date
(vi) Details of Schemes that underwent fundamental attribute change during the quarter:
Scheme Name Scheme Category Open/ Close/ Effective Date of Description
(As per MCR) Interval Fundamental of the
Attribute Change Change
(vii) Clearance received from SEBI to launch New Schemes during the quarter:
Scheme Name Scheme Category Open/ SEBI Validity of
(As per MCR) Close/ clearance SEBI
Interval date clearance
(viii) Details of Assets Under Management (AUM):
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Scheme Scheme Number of AUM as on Total Total AUM as
Name Category (As Folios last day of Inflow Outflow on last
per MCR) previous day of
(INR Cr.) (INR Cr.)
quarter current
quarter
(INR Cr.)
(INR Cr.)
(II) AMC related Activities and Reporting:
(i) Details of other Permissible activity under Regulation 21(b) of SEBI (Mutual Funds)
Regulations, 2026 (MF Regulations):
1. Whether the other activities of the AMC are as per MF Regulations, and
2. Whether AMC continues to meet the networth requirements for each of the activities?
3. Provide explanation for the difference between the performance of various schemes (if the
difference is more than 10%), managed by the same fund manager (i.e. mutual fund
scheme versus other permissible activity). Confirm that the disclosure in this regard is also
made on the website of the AMC.
(ii) Net worth of the AMC: Provide the networth of the AMC and its deployment and confirm
absence of conflict of interest in its deployment.
(iii) Conflicts of Interest:
1. Provide confirmation that there is no conflict of interest between the activities allowed
under Regulation 21(b) of MF Regulations and the mutual fund operation.
2. Provide confirmation w.r.t. compliance with Guidelines for dealing with Conflicts of Interest
of Intermediaries, Recognised Stock Exchanges, Recognised Clearing Corporations,
Depositories and their Associated Persons in Securities Market.
(iv) Details of change in the AMC Directors during the quarter.
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(v) Details of change in the interest of AMC Directors during the quarter.
(vi) Transactions in Securities:
1. Provide details of transactions in securities by the key personnel of the AMC in their own
name or in the name of the AMC to trustees giving details of names of the personnel, name
of the security, purchase / sale details like quantity, rate, value, name of broker, whether
transaction is on personal account or immediate family or fiduciary.
2. Provide confirmation w.r.t. compliance of the guidelines on Investment by Employees of
AMC on a continuous basis and reporting of any violations and remedial action taken to
Trustees.
(vii) Enhancing disclosures on proxy votes cast by Mutual Funds: Review and ensure that
AMC has voted on all resolutions and the rationale recorded for vote decision is prudent and
adequate.
(viii) Provide status of compliance on Cyber Security and Cyber Resilience framework for
Mutual Funds / Asset Management Companies (AMCs)
(ix) Regulatory Actions: Details of all regulatory actions initiated or taken during the quarter
such as enforcement proceedings, warning, deficiency, if any, received from SEBI and/or
other regulators or Govt. Agencies along with corrective actions taken.
(III) SEBI mandated Reporting
A. Products Related
1) Necessary systems in place: AMCs to confirm that it has necessary systems in place for
back office etc., appointed all key personnel, auditors, compliance officer, registrars, prepared
compliance manual, specified broker empanelment norms, obtained in-principle approvals
from stock exchanges, etc.
2) Easy availability of Offer Documents: AMCs to confirm that it has adopted the SID and KIM
formats as specified by SEBI and ready availability of offer documents such as SID, KIM and
SAI with distributors/ ISCs of Mutual Funds and also on its website.
3) Launch of Additional Plans under existing Schemes: AMCs to confirm that the additional
plans/schemes launched during the quarter were not for a particular investor on any arbitrary
date and these were open for subscription for all the investors.
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B. Performance Related
1) Selection of Appropriate Benchmarks: AMC to confirm that the scheme specific
benchmarks assigned to each schemes are appropriate.
2) Performance along with Benchmark returns: Performance of all schemes vis-à-vis its
benchmark and additional benchmark as on the end of the quarter in 1-year, 3-year, 5-year,
10-year and since the date of allotment of the units.
C. Investments Related
1) Investments: AMCs to confirm that the investments in mutual fund schemes have been made
in accordance with MF Regulations and various circulars issued there under, Trust Deed,
investment objective of the Schemes and are in the interest of unitholders.
2) Exposure of a mutual fund, across all its schemes, towards individual issuers, group
companies and sectors: AMC to confirm that the exposure of mutual fund in debt and money
market instruments, across all its schemes, towards individual issuers, group companies and
sectors are in compliance with the regulatory requirements and regular review of such
exposure is undertaken.
3) Exposure in equity in excess of 10% of the paid up capital of a Company: Details of the
date of purchase, name of the company, purchase price, value and holding percent in the
capital carrying voting rights, whether any of such companies are Associates of the Sponsor
/ AMC, justification for making the investment.
4) Intended Portfolio Allocation: Details on the disclosed portfolio allocation and the actual
portfolio of close ended debt oriented schemes launched during the quarter.
5) Inter-scheme Investments: Details of inter-scheme investments happened during the
quarter including name of the schemes, date of investment, price, value, charges levied, if
any, etc.
6) Recording of Investment decisions by the AMC, Investments in unlisted, privately
placed securities, if any: Details of investments in unlisted and privately placed securities, if
any during the quarter including the performance of such investments and also details of the
due diligence being exercised while making such investment decisions. AMCs to confirm that
such investments and its valuation were in compliance with the regulatory requirements.
7) Investment in unrated debt instruments: Details of investments in unrated debt instruments
during the quarter, if any along with details of due diligence being exercised while making such
investment decisions. AMCs to confirm that such investments and its valuation were in
compliance with the regulatory requirements.
8) Comments on investments downgraded to below investment grade or default: Details
of investments downgraded to below investment grade or default during the quarter.
Comments on steps taken or to be taken by the AMC.
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9) Overseas Investments by Mutual Funds: Comments on necessary due diligence in making
investment decisions, detailed analysis of risks and returns of overseas investment and how
these investments would be in the interest of investors. Further, in case of investment in
overseas mutual fund schemes, the details w.r.t. management fees & other expenses charged
by the underlying schemes and also by the investing scheme may be provided. AMCs to
confirm that such investments and its valuation were in compliance with the regulatory
requirements.
10) Parking of funds in Short Term Deposits of Scheduled Commercial Banks (SCBs):
Confirms that provisions of MF Regulations and various circulars issued thereunder pertaining
to parking of funds in short term deposits pending deployment are complied with at all points
of time. Details of funds parked in Short-term Deposits of SCBs due to pending deployment,
during the quarter.
11) Participation in Repo on Corporate Debt Securities, Credit Default Swaps (CDS), InvIT,
Commodity Derivatives, etc.: AMC to confirm that participation of mutual fund schemes in
repo on corporate debt securities, Credit Default Swaps, InvITs, commodity derivatives, etc.
were in compliance with the regulatory requirements and in the interest of investors.
12) Carry Forward Transactions: AMCs to confirm that the funds of a scheme shall not in any
manner be used in carry forward transactions. Give details of such transactions which resulted
in carry forward transactions – date, scrip, name of the broker, rate and quantity in custody,
etc.
13) Stock / Securities Lending: Details with regard to securities lending during the quarter, in
terms of value, volume and intermediaries and also earnings and/or losses, value of collateral
security, etc. and confirm that the same is not, in any way, detrimental to the interests of the
unit-holders of the scheme.
14) Borrowings: Data on borrowing by mutual fund schemes during the quarter with certain
details such as date, nature of borrowing, source, amount borrowed, purpose of borrowing,
interest rate, security offered for the borrowing, percent of borrowing to net asset on date of
borrowing, date of repayment or proposed manner of liquidation of the debt, amount borne by
the scheme, amount borne by the AMC and the average portfolio yield during that period, etc.
Further, if borrowing is from any associate of the sponsor or AMC, provide reasons for
borrowing from such entity and competitiveness of the terms.
15) Inter-Scheme Transfers (ISTs): Details on ISTs during the quarter such as dates, name of
transferor and transferee schemes, securities transferred and price, value of transfer and
specific reasons for the transfer.
16) Cross Investments: In case any company has invested more than 5 per cent of the net asset
value of a scheme, the details of investment made by that scheme or by any other scheme of
the same mutual fund in that company or its subsidiaries shall be provided to the trustees with
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justification for such investment, provided the latter investment has been made within one year
of the date of the former investment calculated on either side.
17) Code of Conduct for Fund Managers and Dealers: Confirm that the code of conduct as
specified for fund managers and dealers in MF Regulations were complied with during the
quarter.
18) Valuation of Investments:
i. AMC to confirm that the valuation of all debt and money market instruments during the
quarter were done in compliance with the regulatory requirements. Report the justification
for deviations, if any, from indicative haircut and / or valuation price for securities below
investment grade provided by valuation agencies.
ii. AMC to confirm that valuation of investments made by its scheme(s) was in accordance
with the Investment Valuation Norms specified in Seventh Schedule of MF Regulations,
and publishing the same. Periodic review of the valuation policy by the AMC and annual
review by the Statutory Auditors.
iii. AMC to confirm that in case of change in terms of the issue of any security, the same has
been communicated to the Valuation Agencies.
19) Trade Execution and Allocation: AMC to confirm compliance with regulatory requirements
relating to Trade Execution and Allocation prescribed by SEBI. Further, any non-compliance
and material information, if any, in this regard needs to be reported to trustees.
D. Risk Management Related
1) Risk Management Framework for MFs: Details of outcomes of the risk management
framework for mutual funds along with steps taken to address the same. Confirm that the
existing risk management framework of mutual fund is in compliance with the regulatory
requirements and ensures protection of interest of investors.
2) Stress Testing: Details of outcomes of the stress testing of open ended mutual fund schemes
along with steps taken to address the same.
E. Empanelment of Broker for purchase or Sale of Securities
1) Confirm that the AMC has not dealt with any associate broker for purchase or sale of
securities, which is average of 5% or more of the aggregate purchases and sale of securities
made by the mutual fund in all its schemes for a block of three months.
2) Confirm that in case the AMC has dealt through any other broker other than a associate broker
in excess of 5% or more of the aggregate purchase and sale of securities made by the mutual
fund in all its schemes, the AMC has recorded in writing the justification for the same. In this
regard provide details such as date of transactions, name of broker, value of business,
brokerage paid, percent of business to total business for the day, whether the broker is
associated with the sponsor or through a firm which is an associate of the sponsor, etc.
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3) Diligence in empaneling the brokers, monitoring securities transactions with brokers and
avoiding undue concentration of business with any broker.
F. Operations Related
1) Scheme-wise segregation of Assets and liabilities & Bank Accounts and Securities
Accounts: Confirm that the assets and liabilities of each scheme are segregated and ring-
fenced from other schemes of the mutual fund; and bank accounts and securities accounts of
each schemes are segregated and ring-fenced.
2) Identification and Appropriation of Expenses:
i. Confirm that all scheme related expenses including commission paid to distributors, by
whatever name it may be called and in whatever manner it may be paid, was paid from
the scheme only within the regulatory limits and not from the books of the Asset
Management Companies (AMC), its associate, sponsor, trustee or any other entity through
any route.
ii. Confirm that in case certain expenses are paid from the AMC books then they are in
compliance with the regulatory requirements and are within the permissible limit of 2 bps
and are properly recorded and audited.
3) Maintenance of proper Books of Accounts, Records and Documents: Confirm that the
books of accounts, records and documents for each scheme are kept and maintained properly
and intimated to SEBI the place where such books of account, records and documents are
maintained
4) Reconciliation of investment in Government Securities: With respect to investments in
Government securities, the AMC has reconciled the balances in their Subsidiary General
Ledger (SGL) / Constituent Subsidiary General Ledger (CSGL) Account with the statement
issued by RBI, at monthly intervals. The AMC has also submitted a compliance certificate on
a quarterly basis to RBI. The reconciliation procedure is a part of internal audit and the auditors
check on a continuous basis about the status of reconciliation and submit a report to the Audit
Committees. These reports are placed in the meetings of Boards of AMCs and Trustees.
G. Investor Related
1) Minimum Investors and Maximum Holding during the quarter: Confirm that the regulatory
requirements w.r.t. minimum number of 20 investors and no single investor hold more than
25% of the net assets of the scheme were complied with during the quarter.
2) Investments by any company amounting to more than five percent of the net asset value
of a scheme: Indicate names of companies / schemes and their association with the Sponsor
or the AMC, if any.
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3) Uniform cut-off timings for applicability of Net Asset Value (NAV) of Mutual Fund
scheme(s)/plan(s): Confirm compliance with the regulatory requirements with regard to
uniform cut-off timings for applicability of NAV. Provide details of manual time stamping of
applications during the quarter along with adequate justification for the same and also steps
taken to avoid occurrence of the same in future. Also list instances of damages of the seal
and/or breakdown of the electronic time stamping process, if any.
4) Despatch of redemption proceeds and Transfer of Units: Confirm that all redemption and
dividend payments are made with in the regulatory limits. In case of delay in payment within
the period specified, interest is paid to the unitholders, for the period of such delay, at such
rate as specified by the SEBI.
5) Status of Investor Complaints: Provide the status of investor complaints received through
various modes and the redressal of the same by the AMC including ageing schedule and
reasons.
Category No. of Complaints Ageing analysis of pending complaints Reaso
n for
pendin
g
compl
aints
Receiv Redresse Pending 0-3 4-7 8-20 21-40 41-60 Beyond
ed d days days days days days 60 days
TOTAL
6) KYC and AML Compliance including requirements on PAN, FATCA, etc.:
Confirm that the regulatory requirement for Know Your Customer (KYC) norms and the Anti-
Money Laundering/ Countering the Financing of Terrorism (AML/CFT) Obligations under the
Prevention of Money Laundering Act, 2002 and Rules framed thereunder (PMLA) are
complied with.
7) Consent of Unitholders: Confirm that wherever required, consent of unitholders were taken
during the quarter in terms of MF Regulations.
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H. Distributor Related
1) Distributor Empanelment: Number of new distributors empanelled by the AMC during the
quarter, for the purpose of selling and distribution of units of mutual fund schemes with the
following details:
(a) List of Domestic Distributors empanelled
(b) List of Overseas Distributors
(c) List of New cadre Distributors
In cases where the ARN of distributors expired, whether the commission payable to
the distributor is withheld by the AMC?
Due Diligence: At the time of empanelment of distributors and during the period of
review, AMCs has undertaken a due diligence process to satisfy ‘fit and proper’ criteria.
2) Certification and Registration of Intermediaries (Distributors) and Employees:
(a) Certification of agents / distributors and employees of AMC: The
distributors/agents empanelled for selling and distribution of mutual funds and also
the employees of the AMC engaged for selling and distribution were having the
required certification.
(b) Brokerage on own Investments: No brokerage has been paid to the brokers on
their own investments.
(c) Code of Conduct for Intermediaries (Distributors): Confirm that the activities of
their agents/distributors are monitored on continuous basis to ensure that they do
not indulge in any kind of malpractice or unethical practice while selling/marketing
mutual fund units. If any intermediary (distributor) did not comply with the code of
conduct, the same has been reported to AMFI and SEBI. There was no dealing
with those intermediaries (distributor) who do not follow the code of conduct.
3) Indicative portfolio and indicative yield: Confirm that no indicative portfolio and indicative
yield has been communicated in any manner whatsoever by the MF/ Distributors:
I. Service Provider Related
1) Service Contracts: Confirm the following:
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(a) Review of all service contracts such as custody arrangements, transfer agency of
the securities to ensure that such contracts are executed in the interest of the
unitholders [Regulation 22(7)(c)(f)]
(b) All service providers are holding appropriate registrations from SEBI or concerned
regulatory authority [Regulation 22(7)(c)(i)]
(c) The trust property is properly protected, held and administered by proper persons
and by a proper number of such persons. [Regulation 12(5)(e)(iii)]
2) Specific attention by Independent Directors of Trustees or AMC: Confirm that the
independent directors have given specific attention on the areas mentioned under
Regulation 12(5)(f) of SEBI (Mutual Funds) Regulations, 2026. Details of comments,
if any, to be provided to trustees.
3) Any Special Developments: Details of any special developments in the mutual fund
during the quarter shall be provided to trustees.
(IV) Associate Transactions
a. Confirm that utilisation of services of the sponsor or any of its associates, employees
or their relative for any securities transaction; and distribution and sale of securities;
and the brokerage and commission paid for such services; were disclosed and were
in accordance with the regulatory requirements.
b. Details of securities transactions in terms of Regulation 22(5)(b) of the MF
Regulations:
 Any underwriting obligations undertaken by the schemes of the mutual funds with
respect to issue of securities of associate companies and devolvement, if any.
 Subscription by the schemes in the issues lead managed by associate companies;
and
 Subscription of securities by the Schemes to any issue on private placement basis
where the Sponsor or its associate companies have acted as arranger or manager.
c. Details of investments made by the schemes during the period in securities of any of the
associate companies
d. Details pertaining to securities transactions during the period where associates are the counter
parties.
e. Details with justification about purchase and sale of securities of the Sponsor, group
companies or associates of the Sponsor or AMC during the quarter.
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f. Confirm that no investment by mutual fund scheme is made in any unlisted or privately placed
securities of an associate or group company of the sponsor.
g. Investments/ redemption by the AMC, Sponsor, any associate or group company of the
Sponsor in any of the schemes during the quarter.
*****
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H. TREATMENT OF CORPORATE ACTIONS500
(i) Involuntary corporate actions: In case of corporate actions where investors have no choice in
the matter, for example: demerger of companies, etc., the compliance status of RGESS demat
account shall not change.
(ii) Voluntary corporate actions: In case of corporate actions where investors have the option to
exercise his choice and thereby result in debit of securities, for example: buy-back, etc., the
same shall be considered as a sale transaction for the purpose of the scheme.
Consolidated list of ‘corporate actions’
Sr. Corporate Action Classification (Involuntary or
No. Voluntary)
1 Amalgamation Involuntary
2 Scheme of Arrangement Involuntary
3 Reduction of Capital Involuntary
4 Bonus issue Involuntary
5 Buy Back of Shares Voluntary (Involuntary in case of
court intervention)
6 Stock Split Involuntary
7 Consolidation of Shares Involuntary
8 Conversion of Partly Paid up Involuntary
9 Dividend [Final/ Interim/ Special] Involuntary
10 Exchange of Share Certificate Involuntary
[Name change]
11 Rights Issue Voluntary
12 Conversion (compulsory)* Involuntary
13 Conversion (optionally)* Involuntary
14 Redemption Involuntary (voluntary, if there is
option to continue with revised
terms)
15 Dividend on Mutual Fund Involuntary
16 Redemption of Mutual Fund Involuntary on maturity (voluntary, if
there is option to shift between
different scheme(s) or on account of
exit option due to change in
fundamental attributes of scheme)
* Considering any conversion into equities (e.g.: Conversion of warrants into equities)
500 SEBI Circular No.CIR/MRD/DP/32/2012 dated December 6, 2012
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I. FORMAT FOR OVERSEAS INVESTMENTS REPORT501
Overseas Investments Report as on DD/MM/YYYY
New Fund Offers (NFOs) - Overseas Investments (other than Overseas ETFs)
Name of Name of Intended Date of Date of Limit utilized Unutilized
the the Investment Completion Completion as at the Balance
Mutual Scheme as of NFO of 6 month end Amount (in
Fund disclosed calendar DD/MM/YYYY USD mn)
in Scheme months (in USD mn)
Documents from (4)
(in USD
mn)
(1) (2) (3) (4) (5) (6) (7)
New Fund Offers (NFOs) – Overseas ETFs
Name of Name of Intended Date of Date of Limit utilized Unutilized
the the Investment Completion Completion as at the Balance
Mutual Scheme as of NFO of 6 month end Amount (in
Fund disclosed calendar DD/MM/YYYY USD mn)
in Scheme months (in USD mn)
Documents from (4)
(in USD
mn)
(1) (2) (3) (4) (5) (6) (7)
501 SEBI Circular No. SEBI/HO/IMD/DF3/CIR/P/2020/225 dated November 05, 2020
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Ongoing Schemes
Particulars Name Limit Averag Additiona Limit % of the (5) Unutilized
of the utilized as e AUM l limit/ utilized as on Balance
Mutual at the end for Headroo at the maximum Amount (in
Fund of previou m month end entitled USD mn)
previous s three available DD/MM/YY investment
month calenda based on YY limit
DD/MM/YY r 20% of (3) (in USD
YY months mn)
(in USD
mn)
(1) (2) (3) (4) (5) (6) (7)
Overseas
Investments
(other than
Overseas
ETFs)
Overseas
ETFs
Page 566 of 748
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J. FORMAT FOR REPORTING OF ALL TRANSACTION IN DEBT AND MONEY
MARKET SECURITIES502
# Nomenclature of "Type of security" shall be strictly mentioned as Commercial Paper, Certificate of Deposit, Corporate
Bond, Debentures, Securitised Debt, Zero Coupon Bonds, AT1 Bond, Government Bonds (Include State Development
Loans, special purpose bonds such as Uday Bonds, Fertilizer Bonds, etc), Tresury Bills, Cash Management Bills, Bill
Rediscounting Scheme, Corporate Bond Repo, Reverse Repo, TREPS, Others (please specify)
## Nomenclature of "Listed status of security" shall be strictly mentioned as Listed, Unlisted, Awaiting Listing, Not Applicable
$ Nomenclature of "Type of scheme" shall be strictly mentioned as Close ended, Open ended, Interval
$$ All date formats should be in DD-MM-YYYY
@ Deemed Maturity date may be "put or/and call date" or "coupon reset date" etc. whichever is used for pricing
@@ Please mention Clean price per 100 Rupee atleast upto 6 decimal places (In case of Zero Coupon Bonds please
mention dirty price per 100 Rupee)
* Please mention traded yield in percentage term atleast upto 4 decimal
** Yield at which said security valued on previous day in NAV in case of security already held by any scheme of the Mutual
Fund and yield at which said security valued at the end of day in NAV in case of first time buy. Please mention traded yield
in percentage term atleast upto 4
Decimal
*** Inter Scheme Transfer/Primary/Secondary through market/ Secondary through off-market/Buyback/Other (Specify)
502 SEBI circular no. Cir/IMD/DF/6/2012 dated February 28, 2012, SEBI/HO/IMD/DF2/CIR/P/2017/109 dated September 27, 2017 and
SEBI/HO/IMD/DF4/CIR/P/2020/163 dated September 01, 2020
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K. INVESTMENT VALUATION NORMS FOR MUTUAL FUNDS 503
All mutual funds shall provide transaction details of various types of debt securities like NCDs, Mibor
linked floaters and CPs on daily basis in the format below to the agency recommended by AMFI.
Submission of data would help in daily matrix generation, would improve uniformity and accuracy of
valuation in the mutual funds industry.
Stagger Put/C Put/C
Intere Volu
ed all all Cle
Date Of Secur Secur Staggered st me YTM
Coup Redemp Rati Optio Optio an
Transac ity ity Redemption/M Paym (in (Annuali
on tion ng n n Pric
tion Name Type aturity Dates ent Rs. sed)
/Maturit Date Value e
Dates Crs)
y Values s s
NCD
Mibor
Linke
d
CP
503 SEBI Cir No - MFD/CIR.No 23 / 066 /2003 dated March 7, 2003
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4. FINANCIALS
A. HALF YEARLY FINANCIAL RESULTS FOR THE YEAR ENDED504
HALF YEARLY FINANCIAL RESULTS FOR THE PERIOD ENDED_________
SR.NO PARTICULARS SCHEME NAMES
1.1 Unit Capital at the beginning of the half year period [Rs. in
Crores]
Unit Capital at the end of the period [Rs. in Crores]
1.2
2 Reserves & Surplus [Rs. In Crores]
3.1 Total Net Assets at the beginning of the half year period [Rs.
in Crores]
Total Net Assets at the end of the period [Rs. in Crores]
3.2
4.1 NAV at the beginning of the half year period [Rs.]
4.2 NAV at the end of the period [Rs.]
4.3 Dividend paid per unit during the half-year [Rs.]
Income
504 MFD/CIR/1/200/2001 dated April 20,2001
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5.1 Dividend [Rs. in Crores]
5.2 Interest [Rs. in Crores]
5.3 Profit/(Loss) on sale/redemption of investments (other than
inter scheme transfer/sale) [Rs. in Crores]
Profit/(Loss) on inter-scheme transfer/sale of investments
[Rs. in Crores]
5.4
Other Income (indicating nature) [Rs. in Crores]
Unrealized Gain/(Loss) [Rs. In Crores]
5.5
5.6
Total Income (5.1 to 5.6) [Rs. in Crores]
6.1 Expenses
- Commission (including GST)
- Other expenses (including GST)
Management Fees (including GST) [Rs. in Crores]
6.2
Trustee Fees (including GST) [Rs. in Crores]
6.3
Brokerage & Transaction Cost (including GST) [Rs. in
6.4 Crores]
Total Recurring Expenses (including 6.1 to 6.4) [Rs. in
Crores] (separately disclose for direct plan and regular
6.5
plan)505
Percentage of Management Fees to daily net assets at plan
level for the half year [% p.a.]
Total Recurring expenses as a percentage of daily net
assets [%] at plan level
7.1 Returns during the half-year * [ (+) (-) ]
7.2 Compounded Annualised yield in case of schemes in
existence for more than 1
505 SEBI Circular No. SEBI/HO/IMD/PoD1/CIR/P/2024/150 dated November 05, 2024
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Year **
i. Last 1 year [%]
ii. Last 3 years [%]
iii. Last 5 years [%]
iv.Since launch of the scheme (date of launch to be given)
[%]
(separately disclose for direct plan and regular plan)506
8 Provision for Doubtful Income/Debts [Rs. in Crores]
9 Payments to associate/group companies (if applicable) [Rs.
in Crores]
10 Investments made in associate/group companies (if
applicable) [Rs. in Crores]
Considering the movement of NAV during the half year and after adjustment of dividend, bonus, etc.
** For the calculation of compounded annualized yield, the procedure prescribed in Standard Offer
Document shall be followed. All performance calculations shall be based only on NAV and the payouts
to the unit holders. The calculation of returns shall assume that all payouts during the period have
been reinvested in the units of the scheme at the then prevailing NAV. The type of plan/option of the
scheme for which yield is given shall also be mentioned.
Notes:
1. Effect of changes in the accounting policies on the above items to be disclosed by way of notes.
2. Details of transactions with associates in terms of Regulation 22(5)(b), if applicable, to be given
by way of note.
3. Details of investments made in companies which have invested more than 5% of the NAV of a
scheme in terms of Regulation 22(6), if applicable, to be given as a note.
506 SEBI Circular No. SEBI/HO/IMD/PoD1/CIR/P/2024/150 dated November 05, 2024
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4. Details of large holdings (over 25% of the NAV of the scheme), if applicable, including information
about the no. of such investors and total holdings by them in percentage terms, to be given as a
note.
5. Borrowings if any, above 10% of the net assets of any scheme of a mutual fund to be disclosed.
6. Exposure if any, of more than 10% of the net assets of any scheme of a mutual fund investing in
derivative products to be disclosed.
7. All other disclosures as specifically stipulated in the SEBI (Mutual Funds) Regulations, 2026,
amended from time to time.
8. Performance of benchmark indices shall be disclosed below the returns of specific schemes for
the same period. Mutual Funds can give the performance of more than one benchmark index also,
if they so desire. Mutual funds may also give the perception of the management on the
performance of their schemes507.
9. Scheme wise percentage of investments made in foreign securities shall be disclosed as a
footnote508.
507 SEBI Circular - SEBI/MFD/CIR No. 6 / 12357 /03 June 26, 2003
508 SEBI Circular – SEBI/IMD/Cir No 7/104753/07 dated September 26, 2007
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B. ABRIDGED SCHEME-WISE ANNUAL REPORT FORMAT509
Auditors' Report
Append the Auditors' Report to the financial statements of schemes, drawn up in conformity with
SEBI (Mutual Funds) Regulations, 2026.
ABC Mutual Fund
Address
Trustee Report
1 Scheme Performance, Future Outlook and Operations of the Schemes
Brief commentary on the scheme's one year and since inception performance vis-à-vis the
benchmark. Performance to be as of the period / year end. Future Outlook of the Fund and
Operations of the Schemes.
2 Brief background of Sponsors, Trust, Trustee Co. and AMC co.
a.__________Mutual Fund
_______________ Mutual Fund (_____MF) was set up as a Trust by the Settlers,
_______________ on _______________ with _____________Trustee Company (the
Trustee Company) as a Trustee in accordance with the provisions of the Indian Trust Act,
1882 and is duly registered under the Indian Registration Act, 1908. The Trustee has entered
into an Investment Management Agreement dated _____________ with _____________ Ltd.
(the AMC) to function as the Investment Manager for all the Schemes of ___MF. ____MF was
registered with SEBI on ____________.
b.___________Trustee Company
509 SEBI Circular No. IMD/CIR No.8/132968/2008 dated July 24, 2008
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The Trustee is the exclusive owner of the Trust Fund and holds the same in trust for the benefit
of the unitholders. The Trustee has been discharging its duties and carrying out the
responsibilities as provided in the Regulations and the Trust Deed. The Trustee seeks to
ensure that the Fund and the Schemes floated there under are managed by the AMC in
accordance with the Trust Deed, the Regulations, directions and guidelines issued by the
SEBI, the Stock Exchanges, the Association of Mutual Funds in India and other regulatory
agencies
3 Investment Objectives of the Schemes
4 Significant Accounting Policies: a Note confirming that "Accounting policies are in
accordance with Securities Exchange Board of India (Mutual Fund) Regulations 2026."
Deviation, if any, should be reported.
5 Unclaimed Dividends & Redemptions
Summary of No. of Investors & Corresponding amount scheme wise
Unclaimed Dividends Unclaimed Redemptions
Scheme Amount (Rs.) No. of Investors Amount (Rs.) No. of Investors
Scheme A
Scheme B
6 Statutory Information:
a. The Sponsors are not responsible or liable for any loss resulting from the operation of the
Schemes of the Fund beyond their initial contribution (to the extent contributed) of Rs.
__________ for setting up the Fund, and such other accretions / additions to the same.
b. The price and redemption value of the units, and income from them, can go up as well as
down with fluctuations in the market value of its underlying investments.
c. Full Annual Report shall be disclosed on the website (www...........) and shall be available
for inspection at the Head Office of the mutual fund. Present and prospective unit holder can
obtain copy of the trust deed, the full Annual Report of the Fund / AMC at a price.
For ____ Trustee Company
Director
Page 574 of 748
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Place:
Date:
ABC MUTUAL FUND
Address
Abridged Balance Sheet as at
_____________
Rupees
in Lakhs
Scheme A Scheme B Scheme C
As at As at As at As at As at As at
Current Previous Current Previous Current Previous
Year Year Year Year Year Year
LIABILITIES
1 Unit Capital
2 Reserves & Surplus
2.1 Unit Premium Reserves
2.2 Unrealised Appreciation Reserve
2.3 Other Reserves
3 Loans & Borrowings
4 Current Liabilities & Provisions
Provision for doubtful
4.1 Income/Deposits
4.2 Other Current Liabilities & Provisions
TOTAL
ASSETS
Page 575 of 748
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1 Investments
1.1. Listed Securities:
1.1.1 Equity Shares
1.1.2 Preference Shares
1.1.3 Equity Linked Debentures
1.1.4 Other Debentures & Bonds
1.1.5 Securitised Debt securities
1.2 Securities Awaited Listing:
1.2.1 Equity Shares
1.2.2 Preference Shares
1.2.3 Equity Linked Debentures
1.2.4 Other Debentures & Bonds
1.2.5 Securitised Debt securities
1.3 Unlisted Securities
1.3.1 Equity Shares
1.3.2 Preference Shares
1.3.3 Equity Linked Debentures
1.3.4 Other Debentures & Bonds
1.3.5 Securitised Debt securities
1.4 Government Securities
1.5 Treasury Bills
1.6 Commercial Paper
1.7 Certificate of Deposits
1.8 Bill Rediscounting
1.9 Units of Domestic Mutual Fund
1.10 Foreign Securities
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Total Investments
2 Deposits
3 Other Current Assets
3.1 Cash & Bank Balance
Triparty repo on Government
securities or treasury bills
3.2 / Reverse Repo Lending
3.3 Others
4 Deferred Revenue Expenditure
(to the extent not written off)
TOTAL
Notes to Accounts - Annexure I
ABC MUTUAL FUND
Address
Abriged revenue account for the year/ Period Ended _____
Rupees in
Lakhs
Scheme A Scheme B Scheme C
Current Previous Current Previous Current Previous
Year / Year / Year / Year / Year / Year /
Period Period Period Period Period Period
ended Ended ended ended ended ended
___ ___ ___ ___ ___ ___
1 INCOME
1.1 Dividend
Page 577 of 748
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1.2 Interest
1.3 Realised Gain / (Loss) on
Foreign Exchange
Transactions
1.4 Realised Gains / (Losses)
on Interscheme sale of
investments
1.5 Realised Gains / (Losses)
on External sale /
redemption of investments
1.6 Realised Gains / (Losses)
on Derivative Transactions
1.7 Other Income1
( A )
2 EXPENSES2
2.1 Management fees
2.2 Goods & Service Tax
on Management fees
2.3 Transfer agents fees and
expenses
2.4 Custodian fees
2.5 Trusteeship fees
2.6 Commission to Agents
2.7 Marketing & Distribution
expenses
2.8 Audit fees
2.9 Other operating expenses
( B )
3 NET REALISED GAINS /
(LOSSES) FOR THE
YEAR / PERIOD (A -B = C)
Page 578 of 748
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4 Change in Unrealised
Depreciation in value of
investments (D)3
5 NET GAINS / (LOSSES)
FOR THE YEAR / PERIOD
(E=(C-D))
6 Change in unrealised
appreciation in the value of
investments (F)4
7 NET SURPLUS /
(DEFICIT) FOR THE YEAR
/ PERIOD ( E +
F = G )
7.1 Add: Balance transfer from
Unrealised Appreciation
Reserve
7.2 Less: Balance transfer to
Unrealised Appreciation
Reserve
7.3 Add / (Less): Equalisation
8 Total
9 Dividend appropriation
9.1 Income Distributed during
the year / period
9.2 Tax on income distributed
during the year / period
10 Retained Surplus /
(Deficit) carried forward
to Balance sheet
Notes to Accounts - Annexure I
Guidance Note
1 : Provide details of significant items indicating nature & corresponding amount in Notes to accounts
2 : State in the notes to accounts that expenses other than management fee is inclusive of Goods & Service
Tax where applicable.
3. Unrealized Depreciation to be computed by each asset category and shown on an aggregated basis. This
should take into account change in unrealized depreciation for the year/period and write back of unrealized
depreciation provided in the previous year end.
Page 579 of 748
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4. Unrealized Appreciation to be computed by each asset category and shown on an aggregated basis. This
should take into account change in unrealized appreciation for the year/period and write off of unrealized
appreciation provided in the previous year end.
ABC Mutual Fund
Address
Notes to Accounts - Annexure I to the Abridged Balance Sheet and Revenue Account for the
Year / Period ended _____________
1 Investments: -
1.1. Note confirming that Investments of the Schemes are registered in the name of the
Trustees for the benefits of the Schemes Unitholders.
1.2. Open Position of derivatives (outstanding market value & % to Net Assets as of the Year
end).
1.3. Investments in Associates and Group Companies: Provide details of issuer, nature of
instruments, amount, aggregate investments by all schemes.
1.4. Open position of Securities Borrowed and / or Lend by the scheme.
1.5. Details of securities classified as below investment grade or default510: Aggregate market
value and provision thereof.
1.6. Aggregate Unrealised Gain / Loss as at the end of the Financial Year / Period and
percentage to net assets.
1.7. Aggregate Value of Purchase and Sale with Percentage to average assets.
1.8. Non-Traded securities in the portfolio: Provide Aggregate Value of Equity, Debt & Money
Market Instruments and percentage to net assets.
2 Details of Transaction with Associates under Regulation 22(5)(b). Provide details of
name of associate, nature of payment and amount
510 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019
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3 "Large Holdings in the Scheme (i.e. in excess of 25% of the net assets). Provide details
of No. of Investors and total holdings by them in percentage terms."
4 Unit Capital movement during the year ended / period ended. Planwise details of
movement in units - opening, subscription, redemption, closing. Indicate plan wise face
value of units.
5 Prior Year Comparison - a suitable statement that prior year figures have been
reclassified wherever necessary to conform to current years' presentation.
6 Contingent Liability. Provide details of nature and amount.
Guidance Note: Provide corresponding previous year/period figures for all the above disclosures.
ABC MUTUAL FUND
Address
Key Statistics for the year / period ended _____________
Scheme A Scheme B Scheme C
Current Previous Current Previous Current Previous
Year/ year/ Period Year/ Period year/ Period Year/ Period year/ Period
Period ended ended ended ended ended
ended
1. NAV per unit
(Rs.):
Open
High
Low
End
2. Closing
Assets Under
Management
(Rs. in Lakhs)
End
Average
(AAuM)
3.Gross income
as % of AAuM1
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4. Expense
Ratio:
a. Total
Expense as %
of AAuM (plan
wise)
b.
Management
Fee as % of
AAuM (plan
wise)
5. Net Income
as a percentage
of AAuM2
6. Portfolio
turnover ratio4
7. Total
Dividend per
unit distributed
during the year /
period (plan
wise)
8. Returns:
a. Last One
Year
Scheme
Plan
____
Plan
____
Benchmark
b. Since
Inception
Scheme
Plan
____
Plan
____
Benchmark
1. Gross income = amount against (A) in the Revenue account i.e. Income.
2. Net income = amount against (C) in the Revenue account i.e. NET REALISED GAINS / (LOSSES) FOR
THE YEAR / PERIOD
3. Portfolio Turnover = Lower of sales or purchase divided by the Average AuM for the year/period.
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4. AAuM=Average daily net assets
Page 583 of 748
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C. MONTHLY PORTFOLIO DISCLOSURE511 512 513
Name of the Mutual Fund:
Name of the scheme:
Portfolio Statement for the period ended __
Name of the instrument Quantity Mkt value (Rs in % to NAV
lakhs)
Equity & Equity related -
(a) listed / awaiting listing on Stock Exchanges
1
2
3
Total
(b) Unlisted
1
2
3
Total
Debt Instruments -
(a) listed/awaiting listing on stock exchanges
Rating
511 SEBI Circular No. CIR/IMD/DF/21/2012 dated September 13, 2012, SEBI/HO/IMD/DF2/CIR/P/2017/109 dated September 27, 2017 and
SEBI/HO/IMD/DF3/CIR/P/2020/130 dated July 22, 2020
512 MFD/CIR/9/120/2000 dated November 24, 2000, MFD/CIR/14/18337/2002 dated September 19, 2002
513 SEBI Circular No. Cir/ IMD/ DF/ 11/ 2010 dated August 18, 2010
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1
2
3
Total
(b) Privately Placed/Unlisted
Rating
1
2
3
(C) Securitized Debt Instruments514
Total
Money Market Instruments
1
2
3
Total
Interest Rate Derivatives (both IRS/IRF) 515
1
2
514 SEBI Circular No. IMD/CIR No 8/132968/2008 dated July 24, 2008
515 SEBI/HO/IMD/DF2/CIR/P/2017/109 dated September 27, 2017
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3
Total
Others – cash etc. (please specify)
Grand Total
The portfolio disclosure for derivative positions including IRF516 shall be made as follows:
Hedging Positions through Futures as on …
Underlying Long / Short Futures Price Current price Margin
when purchased of the contract maintained in
Rs. Lakhs
Total %age of existing assets hedged through futures
For the period ended … specify the following for hedging transactions through futures
which have been squared off/expired
Total Number of contracts where futures were bought
Total Number of contracts where futures were sold
Gross Notional Value of contracts where futures were bought
Gross Notional Value of contracts where futures were sold
Net Profit/Loss value on all contracts combined
Exposure created due to over hedging through futures (quantity of hedging position exceeding the
quantity of existing position being hedged) shall be reported in the next table.
516 SEBI Circular No. Cir/ IMD/ DF/ 11/ 2010 dated August 18, 2010 and SEBI/HO/IMD/DF2/CIR/P/2017/109 dated September 27, 2017
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Other than Hedging Positions through Futures as on…
Underlying Long / Short Futures Price Current price Margin
when purchased of the contract maintained in
Rs. Lakhs
Total exposure due to futures (non hedging positions) as a %age of net assets
For the period ended … specify the following for non-hedging transactions through
futures which have been squared off/expired
Total Number of contracts where futures were bought
Total Number of contracts where futures were sold
Gross Notional Value of contracts where futures were bought
Gross Notional Value of contracts where futures were sold
Net Profit/Loss Value on all contracts combined
Hedging Positions through Put Options as on …
Underlying Number of Contracts Option Price Current Option
when Price
purchased
Total %age of existing assets hedged through put options
For the period ended … specify the following for hedging transactions through options
which have already been exercised/expired
Total Number of contracts entered into
Gross Notional Value of contracts
Net Profit/Loss on all contracts (treat premium paid as loss)
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Exposure created due to over hedging through options (quantity of hedging position exceeding the
quantity of existing position being hedged) shall be reported in the next table.
Other than Hedging Positions through Options as on …
Underlying Call / Put Number of Option Price Current Price
contracts when purchased
Total Exposure through options as a %age of net assets
For the period ended … with regard to non-hedging transactions through options
which have already been exercised/expired specify:
Total Number of contracts entered into
Gross Notional Value of contracts
Net Profit/Loss on all contracts (treat premium paid as loss)
Hedging Positions through swaps as on …
Swaps should be disclosed separately as two notional positions in the underlying security with
relevant maturities. For example, an interest rate swap under which a mutual fund is receiving floating
rate interest and paying fixed rate will be treated as a long position in a floating rate instrument of
maturity equivalent to the period until the next interest fixing and a short position in a fixed rate
instrument of maturity equivalent to the residual life of the swap.
The following guidelines should be observed by the AMC when preparing the monthly portfolio
statement for the unitholders:-
1. Entire portfolio irrespective of the quantity, market value and percentage to NAV of any scrip
should be disclosed in descending order of weightage within each sub-group. If percentage to
NAV of any security is less than 0.01%, it may be indicated by giving asterisk or any other
mark instead of showing 0.00.
2. An asterisk/ suitable mark should be given against debt instruments which are below
investment grade or default517 in accordance with SEBI Regulations and guidelines.
517 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019
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3. A double asterisk mark should be given against thinly traded/ non traded securities and illiquid
securities as defined in SEBI Regulations and guidelines.
4. The following information may be given by way of footnotes:
a. If a security is in default beyond its maturity date, then disclosure to this effect shall be
provided. Such disclosure shall include details of the security including ISIN, name of
security, value of the security considered under net receivables (i.e. value recognized
in NAV in absolute terms and as % to NAV) and total amount (including principal and
interest) that is due to the scheme on that investment. Further, this disclosure shall
continue till the value of the security recognized in the NAV is received or for a period
of 3 years from the date of maturity of security, whichever is later.518
b. Total value and percentage of illiquid equity shares.
c. NAV at the beginning and end of the month and any dividend declared during the
period.
d. Total outstanding exposure in derivative instruments at the end of the period.
e. Total investments in foreign securities/ADRs/GDRs at the end of the period.
5. For Equity Oriented Schemes, in addition to the above, the following are required to be
disclosed:
a. Portfolio Turnover Ratio to be disclosed as a footnote.
b. The name of the industry against the name of each security in accordance with industry
classification as recommended by AMFI. The same industry classification may also be
followed by the Mutual Funds while making disclosures of portfolios to investors,
distributors and others, which are non statutory in nature.
6. For Debt Oriented Schemes, in addition to the above, the following are required to be
disclosed
a. Average maturity period to be disclosed as a footnote.
7. Monthly portfolio statements shall disclose all funds parked in short term deposit(s) under a
separate heading. Details shall also include name of the bank, amount of funds parked,
percentage of NAV519.
Further, all term deposits placed as margins for trading in cash and derivatives market shall
be disclosed under a separate heading. Details shall include name of the bank, amount of
term deposits, duration of term deposits, percentage of NAV520.
518 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2019/102 dated September 24, 2019
519 SEBI/IMD/CIR No.1/91171/07 dated April 16, 2007
520 SEBI Circular No. SEBI/IMD/Cir No.7/129592/08 dated June 23, 2008.
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8. Investments in foreign securities shall be disclosed in the prescribed format under a separate
heading "Foreign Securities and/or overseas ETF(s)"521
9. The format of monthly portfolio statement shall reflect the investment in ETCDs. 522
521 SEBI Cir SEBI/IMD/CIR No.7/104753/07 dated September 26, 2007
522 SEBI Cir SEBI/HO/IMD/DF2/CIR/P/2019/65 dated May 21, 2019
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D. DISCLOSURE OF MONTHLY AAUM523
D.1 Format For MAAUM Disclosure:
523 SEBI Circular CIR/IMD/DF/05/2014 dated March 24, 2014, SEBI Circular CIR/IMD/DF/07/2014 dated April 2, 2014 and SEBI Circular
SEBI/HO/IMD/DF2/CIR/P/2018/16 dated February 02, 2018.
Page 591 of 748
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XYZ Mutual Fund : Net Average Assets Under Management (AAUM) as on ________________ (All figures in Rs. Crore)
N S o l. . Scheme Ca N te a g m o e ry/ Scheme I T30 II Through Direct Plan I B30 II I T30 Thro I u I gh Associate Distrib I utors B30 II I T30 Through II Non - Associate Dist I ributors B30 II G TO RA TA N L D
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
A Open ended Schemes
I Debt Schemes
i. Overnight Fund
ii. Liquid Fund
iii. Ultra Short Term Fund
iv. Ultra Short to Short Term Fund
v. Money Market Fund
vi. Short Term Fund
vii. Medium Term Fund
viii. Medium to Long Term Fund
ix. Long Term Fund
x. Dynamic Term Fund
xi. Corporate Bond Fund
xii. Credit Risk Fund
xiii. Banking and PSU Debt Fund
xiv. Gilt Fund
xv. 10 year constant maturity Gilt Fund
xvi. Floating Interest Rates Fund
xvii. Sectoral Fund
Sub total - I
II Equity Schemes
i. Multi Cap Fund
ii. Large Cap Fund
iii. Large & Mid Cap Fund
iv. Mid Cap Fund
v. Small Cap Fund
vi. Dividend Yield Fund
vii. Value Fund
viii. Contra Fund
ix. Focused Fund
x. Sectoral Fund
xi. Thematic Fund
xii. ELSS – Tax Saver Fund
xiii. F l exi Cap Fund
Sub total - II
III Hybrid Schemes
i. Conservative Hybrid Fund
ii. Balanced Hybrid Fund
iii. Aggressive Hybrid Fund
iv. Dynamic Asset Allocation
v. Multi Asset Allocation Fund
vi. Arbitrage Fund
vii. Equity Savings Fund
Sub total - III
IV Life Cycle Funds
i. Life Cycle Funds
Sub total - IV
V Other Schemes
i. Index Funds
ii. Gold ETFs
iii. Silver ETFs
iv. Other ETFs
v. Fund of funds investing overseas
Sub total - V
Total A-Open ended Schemes
B Close Ended Schemes
I Debt Schemes
i. Fixed Term Plan
ii. Infrastructure Debt Fund
iii. Other Debt Schemes
Sub total - I
II Equity Schemes
i. ELSS
ii. Other Equity Schemes
Sub total - II
III Other Schemes
Total B -Close ended Schemes
C Interval Schemes
I Debt Schemes
II Equity Schemes
III Other Schemes
Total C -Interval Schemes
Grand Total
Fund of Funds Scheme
(Domestic)
T30 : Top 30 cities as identified by AMFI Category of Investor
B30 : Other than T30 1 : Retail Investor
2 : Corporates
3 : Banks/FIs
I : Contribution of sponsor and its associates in AUM 4 : FIIs/FPIs
II : Contribution of other than sponsor and its associates in A5U :M High Networth Individuals
D.2 Format for State Wise/ Union Territory Wise contribution to AUM of category of schemes:
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Page 593 of 748
Formats for Master Circular for Mutual Funds as on March 20, 2026
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S
N
l. N o .
1234567891
0
1 1
1 2
1 3
1 4
1 5
1 6
1 7
1 8
1 9
2 0
2 1
2 2
2 3
2 4
2 5
2 6
2 7
2 8
2 9
3 0
3 1
3 2
3 3
3 4
3 5
3 6
3 7
3 8
o te: N am e o
T a b le sh o w in g S ta te w ise /U n io n T e rrito ry w ise co n trib u tio n to A U M o f ca te g o ry o f S ch e m e s a s o n _
X Y Z M u tu a l F u n d (A ll fig u re s in R s. C ro re s)
N a m e o f th e S ta te s/ U n io n L IQ U ID O T H E R E Q U IT Y H Y B R ID F U N D G O L D S IL V E R O T H E R
T e rrito rie s S C H E M E D E B T S C H E M E F U N D S O F E X C H A N E X C H A N E X C H A N
S (I.E . S C H E M E S F U N D S G E G E G E
L IQ U ID , S IN V E S T I T R A D E D T R A D E D T R A D E D
O V E R N I N G F U N D F U N D F U N D
G H T O V E R S E
A N D A S
M O N E Y
M A R K E T
F U N D ) A n dam an an d N ico bar Islan ds
A n dh ra P radesh
A run ach al P radesh
A ssam
B ih ar
C h an digarh
C h h attisgarh
D adra an d N agar H av eli
D am an an d D iu
G o a
G ujarat
H ary an a
H im ach al P radesh
Jam m u an d K ash m ir
Jh ark h an d
K arn atak a
K erala
L adak h
L ak sh adw eep
M adh y a P radesh
M ah arash tra
M an ip ur
M egh alay a
M izo ram
N agalan d
N ew D elh i
O rissa
O th ers
P o n dich erry
P un jab
R ajasth an
Sik k im
T am il N adu
T elan gan a
T rip ura
U ttar P radesh
U ttarak h an d
W est B en gal
T O T A L
f n ew states / un io n territo ries sh all be added alp h abetically
_ _ _
IN
F U
DN ED X
S
T O T A L F U N D
O F
F U N D S
IN V E S T I
N G
D O M E S T
IC
E. FORMATS FOR FINANCIAL STATEMENTS OF THE MUTUAL FUND SCHEMES AS
PER INDIAN ACCOUNTING STANDARDS (IND AS) 524
Contents of scheme-wise Balance Sheet (at Scheme level)
Rupees in Lakhs
Figures as at the Figures as at the
Note
Particulars end of current end of previous
No.
reporting period reporting period
Assets
Financial Assets
Cash and cash equivalents 1
Balances with Bank/(s) 2
Derivative financial instruments 3
Receivables 4
Investments 5
Other Financial assets 6
Non-Financial Assets
Investment Property 7
Other Non -Financial assets 8
Total Assets (A)
Financial Liabilities
Derivative financial instruments 9
Payables 10
Borrowings 11
Other Financial Liabilities 12
Non-Financial Liabilities
524 SEBI Circular no SEBI/HO/IMD-II/DOF8/P/CIR/2022/12 dated February 04, 2022 (effective from April 1, 2023).
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Provisions
Other Non-Financial Liabilities 13
Total Liabilities (B)
Net assets attributable to
holder of redeemable units
The Notes referred to herein form an integral part of the Balance Sheet
Statement of changes in net asset attributable to unit holders of scheme:
Rupees in Lakhs
Figures for the current reporting Period
Reserves & Surplus (Rs.)
Unit
Other
Particulars Capital Unit Unrealised Total
Revenue Reserves (to
(Rs.) Premium Appreciatio (Rs.)
Reserves be
Reserves n Reserves
specified)
Balance at the beginning
of the reporting period
Changes in accounting
policy/prior period errors
Movement during the
reporting period
Transfer from/ to Revenue
account
Equalisation Account
Surplus distribution
Others ( to be specified)
Balance at the end of the
reporting period
Page 595 of 748
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Figures for the previous reporting Period
Particulars Unit Reserves & Surplus (Rs.) Total
Capital Unrealised Other (Rs.)
(Rs.) Unit Appreciatio Reserves
Reven
Premium n (to be
ue
Reserves specified)
Reserves
Reser
ves
Balance at
the beginning of
the reporting
period
Changes in accounting
policy/prior period errors
Movement during the
reporting period
Transfer from/ to Revenue
account
Equalisation Account
Surplus distribution
Others (to be specified)
Balance at the end of the
reporting period
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Movement of Unit Capital
Rupees in Lakhs
Figures for the Figures for the
current reporting previous reporting
period period
Particulars
No of No of
(Rs.) (Rs.)
Units Units
Balance of unit capital at the beginning of the
reporting period
New fund / plan offer during period, Capital
issued during period (including dividend
reinvestment) etc.
Redemptions during the period
Balance of unit capital at the end of the
period
Note: Provide break-up of unit capital plan/option wise.
Contents of Revenue Account (at Scheme level)
Rupees in Lakhs
Figures for the Figures for the
Not
Particulars current reporting previous reporting
e
Period period
No.
Income
Page 597 of 748
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Interest Income
Dividend Income
Rental Income
Gain on fair value changes 14
Gain on Sale/Redemptions of 15
Investments
Others ( to be specified)
Total Income (A)
Expenses
Finance Costs
Fees and commission expenses 16
Loss on fair value changes 17
Loss on Sale/Redemptions of 18
Investments
Others ( to be specified) 19
Total Expense (B)
Surplus/ Deficit for the Reporting
Period (A-B)
The Notes referred to herein form an integral part of the Revenue Account
Notes to Balance Sheet and Revenue Account
Note 1
Cash and cash equivalents
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Figures as at the Figures as at the
Particulars end of current end of the
reporting period previous reporting
period
Reverse repurchase transactions / Triparty
Repo (TREPs) etc.
Cash on Hand
Total
Note 2
Balances with Bank/(s) #
Figures as at the Figures as at the
Particulars end of current end of the
reporting period previous
reporting period
Balances with banks in current account
Deposits with scheduled banks - (Specify the
nature as ASBA deposits, Margin deposits
etc.)
Others ( to be specified)
Total
Note 3
Derivative financial instruments receivable
Figures as at the Figures as at the
Particulars end of current end of the
reporting period previous
reporting period
Stock Futures/ Options
Index Futures/ Options
Commodity Futures/Options
Interest Rate Futures/ Swaps
Currency Futures
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Others (to be specified)
Total
Note 4
Receivables #
Figures as at the Figures as at the
Particulars end of current end of the
reporting period previous reporting
period
Contracts for sale of investments in securities
Receivable from AMC
Receivable from other schemes of Mutual
Fund
Others (to be specified)
Total
Note 5
Investments
Figures as at the Figures as at the
Particulars end of current end of the
reporting period previous
reporting period
Equity shares
Preference shares
Debentures/bonds
Central and State Government Securities
Treasury bills
Commercial Paper
Certificate of Deposits
Units of Domestic Mutual Fund
Commodities (Gold, Silver etc.)
Foreign Securities
Exchange Traded Funds ( ETFs)
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Infrastructure Investment Trust units (INVITS)
Real Estate Investment Trust (REITs)
Calls paid in advance
Securitized Assets
Others (to be specified)
Total
Wherever applicable, the assets shall be further classified according to its nature such as
- Listed/Awaiting listing/ Unlisted
- Convertible/Non-convertible
- Investment Grade/Below Investment Grade
Note 6
Other Financial assets #
Figures as at the Figures as at the
Particulars end of current end of the
reporting period previous reporting
period
Interest Accrued
Dividend Receivable
Margin money
Shares/debentures application money,
pending allotment
Others (to be specified)
Total
Page 601 of 748
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Note 7
Non-Financial Assets - Investment Property
Figures as at the Figures as at the
Particulars end of current end of the
reporting period previous
reporting period
Real Estate Assets
Residential *
Commercial *
Others ( to be specified)
Total
* Shall be sub-classified on the basis of developers, location and project. Particulars shall
include area, cost, fair value, basis of fair value, and legal disputes, etc. Specify non- performing
Investment properties separately.
Note 8
Other Non - Financial assets #
Figures as at the Figures as at the
Particulars end of current end of the
reporting period previous
reporting period
Fixed Assets @
Tax credit receivable
Others (to be specified)
Total
@ Depreciated cost of the Fixed Assets as a whole or net block may be disclosed.
# Allowances for the impairment loss/doubtful receivable/diminution in the value of the
assets shall be disclosed under relevant heads of this notes.
Note 9
Derivative financial instruments payable
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Figures as at the Figures as at the
Particulars end of current end of the
reporting period previous
reporting period
Stock Futures/ Options
Index Futures/ Options
Commodity Futures/Options
Interest Rate Futures/ Swaps
Currency Futures
Others (to be specified)
Total
Note 10
Payables
Figures as at the Figures as at the
Particulars end of current end of the
reporting period previous reporting
period
Contract for purchase of investments in
securities
Income distribution payable
Payable to AMC
Payable to other schemes of Mutual Fund
Payable on redemption of units
Others (to be specified)
Total
Note 11
Borrowings
Figures as at the Figures as at the
Particulars end of current end of the
reporting period previous
reporting period
Loans/Borrowings
Page 603 of 748
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From Reserve Bank of India
From Settlor/Sponsor
From other Commercial Banks
From Triparty Repo (TREPs)
From others ( to be specified)
Total
If the above loans/borrowings are secured, the nature and extent of security should
be disclosed.
Loans/Borrowings by the scheme with amount, rate of interest, source and other
terms shown separately, source-wise.
Note 12
Other Financial Liabilities
Figures as at the Figures as at the
Particulars end of current end of the
reporting period previous reporting
period
Finance Cost on Loans/Borrowing/(s)
Management Fees Payable
Trusteeship Fees Payable
Commission to Distributors Payable
Custodian Fees and Expenses Payable
Registrar Fees and Expenses Payable
Marketing/Publicity/Advertisement
Expenses Payable
Audit Fees Payable
Investor Communication Expense Payable
Investor Education & Awareness Expenses
Payable
Brokerage & Transaction Costs Payable
Unclaimed dividend/income distribution
Unclaimed redemptions
Sundry Creditors
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Others (to be specified)
Total
Note 13
Other Non-Financial Liabilities
Figures as at the Figures as at the
Particulars end of current end of the
reporting period previous reporting
period
Statutory taxes payable
Others ( to be specified)
Total
Note 14
Gain on fair value changes
Figures for the Figures for the
Particulars current reporting previous reporting
Period period
Gross change on account of Gain on fair value
changes (MTM)
Gross change on account of Gain on fair value
changes - Derivative Instruments (MTM)
Change in unrealised gain in the value of
investments due to foreign exchange
fluctuation
Others ( to be specified)
Total
Note 15
Gain on Sale/Redemptions of Investments
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Figures for the Figures for the
Particulars current reporting previous reporting
Period period
Profit on sale/redemption of investments
(Gross)
Profit on inter-scheme sale of Investments
(Gross)
Profit on derivatives transactions (Gross)
Profit on sale of real estate assets
Profit on inter-scheme sale of real estate
assets (Gross)
Others (to be specified)
Total
Note 16
Fees and commission expenses
Figures for the Figures for the
Particulars current reporting previous reporting
Period period
Management Fees
GST on Management Fees
Trusteeship Fees
GST on Trusteeship Fees
Commission to Distributors
GST on Commission to Distributors
Total
Note 17
Loss on fair value changes
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Figures for the Figures for the
Particulars Current reporting previous reporting
Period period
Gross change on account of Gain on fair value
changes (MTM)
Gross change on account of Gain on fair value
changes - Derivative Instruments (MTM)
Change in unrealised gain in the value of
investments due to foreign exchange
fluctuation
Others ( to be specified)
Total
Note 18
Loss on Sale/Redemptions of Investments
Figures for the Figures for the
Particulars current reporting previous reporting
Period period
Loss on sale/redemption of investments
(Gross)
Loss on inter-scheme sale of Investments
(Gross)
Loss on derivatives transactions (Gross)
Loss on exchange rate fluctuation
Loss on sale of real estate assets
Loss on inter-scheme sale of real estate
assets (Gross)
Others ( to be specified)
Total
Note 19
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Expenses – Others
Figures for the Figures for the
Particulars current reporting previous reporting
(inclusive of Period period
applicable
statutory
levies)
Custodian Fees and Expenses
Registrar Fees and Expenses
Marketing/Publicity/Advertisement
Expenses
Audit Fees
Investor Communication Expenses
Investor Education Awareness and Financial
Inclusion related expenses
Brokerage & Transaction Costs
Insurance & Security Expenses
Statutory Taxes
Registration and local charges
Other Operating expenses
Others (to be specified)
Total
Notes
(i) All disclosures required by Indian Accounting Standards (IND AS) shall be applicable with respect
to preparation of annual statements of accounts of the schemes, shall form part of notes to
account.
(ii) Accounting policy in respect of recognition of revenue and income from investments (including
dividend and interest in case of securities and rental income in case of real estate asset) shall be
disclosed by way of a note.
(iii) If a security is in default beyond its maturity date, then disclosure to this effect shall be provided.
Such disclosure shall include details of the security including ISIN, name of security, value of the
security considered under net receivables (i.e. value recognized in NAV in absolute terms and as
% to NAV) and total amount (including principal and interest) that is due to the scheme on that
investment. Further, this disclosure shall continue till the value of the security recognized in the
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NAV is received or for a period of 3 years from the date of maturity of security, whichever is later.
(iv) The total income and expenditure expressed as a percentage of average net assets, calculated
on a Daily Average Net Asset basis should be indicated. Expenditure expressed as a percentage
of average net assets should be at plan level.
(v) Accounting policy of valuation of Investments shall be disclosed.
(vi) Contingent liabilities disclosure should be made of all contingent liabilities, showing separately: -
(a) Underwriting commitments;
(b) Uncalled liability on partly paid shares;
(c) Other commitments; and
(d) Others (specifying details).
(vii) The Balance Sheet and the Revenue Account shall be signed by the Chief Executive Officer,
Chief Operating Officer/Chief Finance Officer/ such other KMP as designated by Board of AMC
who is responsible for preparation of financial statements, Chief Investment Officer, scheme wise
fund manager/s, and the Board of Trustees, and reported upon by the Auditors. The financial
statements of the scheme should be approved at a meeting of the Board of Directors of the Asset
Management Company and also at a meeting of the trustees or in the case of a trustee company
by the Board of Directors of the trustee company.
(viii) Disclosures as required by the Regulations or as may be prescribed by the Board from time to time
shall form part of notes to accounts.
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F. INDICATIVE FORMAT OF HALF-YEARLY CONSOLIDATED ACCOUNT
STATEMENT525
Col 1 Col 2 Col Col Col 6 Col 7 Col 8 Col 9
Col
4 5
3
No. NAV Cumulative Market Average Total Gross commission paid to
Sr. Scheme Folio
ISIN of Amount Value Expense Ratio1 (In % distributors2 3 (in absolute
No. Name No. as
units invested as on terms) terms)
(in INR) (In INR)
on Regular Direct
a. XYZ Equity NA NA
Scheme-
Growth -
Direct Plan
b. ABC NA
Medium
Term-
Growth -
Regular Plan
c. DEF Long NA NA
(ARN-
Term -
Growth -
99999)
Direct Plan
Total
1: Total Expense Ratio (i.e. Base Expense Ratio + all other fees and charges) above represents the average of annualized total expense
ratio charged in the respective schemes during the half-year period.
2: The gross commission in Col. 9 above includes all direct monetary payments and other payments made in the form of gifts / rewards,
trips, event sponsorships etc. by AMCs/MFs to distributors during the half-year period .... to .....
3: The commission in Col 9 above indicates gross commission received by the distributor against the respective investment and does
not exclude costs incurred by distributors such as GST (wherever applicable, as per existing rates), operating costs, etc.
525 Circular no. SEBI/HO/IMD/DF2/CIR/P/2016/89 dated September 20, 2016
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5. STANDARD OFFER DOCUMENTS526
A. SCHEME INFORMATION DOCUMENT (SID)
//Front Cover Page//
SCHEME INFORMATION DOCUMENT
SECTION I
NAME OF THE SCHEME
(Type of Scheme)
1. Name and type of the scheme to be aligned with SEBI Circulars
on Categorization and Rationalization of Mutual Fund Schemes,
2. As per SEBI Circulars on Potential Risk Class (PRC) Matrix for
debt schemes, type of scheme to include PRC description
3. As per SEBI Circulars on Potential Risk Class (PRC) Matrix for
debt schemes, the PRC matrix along with the mark for the cell
in which the scheme resides shall be disclosed on front page of
SID.
4. For Index Funds / Index ETF - Name of scheme shall include
complete name of underlying Index.
5. For Index Funds / Index ETF - Name of scheme shall include
complete name of underlying Index.
6. In case of FOF’s where single fund is underlying (Feeder
Funds): To include the complete name of the underlying fund
in the name of the scheme
7. Product Labelling and Risk-o-meter of the Scheme and
Benchmark should be disclosed
8. In case the scheme is listed/proposed to be listed (ETFs/close
ended etc.), the Scrip Code issued by the stock exchange after
listing to be mentioned below the Scheme Name.
526 SEBI/IMD/CIR No. 5/126096/08 dated May 23, 2008
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This product is suitable Scheme
Benchmark Riskometer (as
for investors who are Riskometer
applicable)
seeking*:
As per AMFI Tier I Benchmark i.e.
……………… (as applicable)
 The above product labelling assigned during the New Fund Offer (NFO)
is based on internal assessment of the scheme characteristics or model
portfolio and the same may vary post NFO when the actual investments are
made
Offer for Units of Rs. -- each for cash
during the
New Fund Offer and Continuous offer for Units at NAV based prices
New Fund Offer Opens on: New Fund Offer Closes on:
Scheme re-opens on:
Name of Mutual Fund :
Name of Asset Management Company :
Name of Trustee Company :
Addresses, Website of the entities
The particulars of the Scheme have been prepared in accordance with the
Securities and Exchange Board of India (Mutual Funds) Regulations 2026,
(herein after referred to as SEBI (MF) Regulations) as amended till date and
circulars issued thereunder filed with SEBI, along with a Due Diligence
Certificate from the AMC. The units being offered for public subscription have not
been approved or recommended by SEBI nor has SEBI certified the accuracy or
adequacy of the Scheme Information Document.
The Scheme Information Document sets forth concisely the information about the
scheme that a prospective investor ought to know before investing. Before
investing, investors should also ascertain about any further changes to this
Scheme Information Document after the date of this Document from the Mutual
Fund / Investor Service Centres / Website / Distributors or Brokers.
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The investors are advised to refer to the Statement of Additional Information
(SAI) for details of Mutual Fund, Standard Risk Factors, Special
Considerations, Tax and Legal issues and general information on www. .
(website address).
SAI is incorporated by reference (is legally a part of the Scheme Information Document). For a free
copy of the current SAI, please contact your nearest Investor Service Centre or log on to our
website.
The Scheme Information Document (Section I and II) should be read in conjunction with the SAI
and not in isolation.
This Scheme Information Document is dated .
Note: The wording in italics is explanatory comments/instructions.
Instructions:
i. A Mutual Fund is free to add any other disclosure, which in the opinion of the
Trustees of the Mutual Fund (Trustees) or the Asset Management Company
(AMC) is material for the investor, provided that such information is not presented
in an incomplete, inaccurate or misleading manner. Care should be taken to
ensure that inclusion of such information does not, by virtue of its nature, or
manner of presentation, obscure or impede understanding of any information that
is required to be included under the Scheme Information Document.
ii. Since investors who rely on the Scheme Information Document may not be
sophisticated in legal or financial matters, care should therefore be taken to
present the information in the Scheme Information Document in simple language
and in a clear, concise and easily understandable manner.
iii. The scheme shall not have a name or title which may be deceptive or misleading.
Scheme’s name should be consistent with its statement of investment policy and
the scheme name should be in line with SEBI circulars on categorization.
iv. The type of the scheme would mean whether the scheme is an equity scheme,
debt scheme, hybrid scheme etc. and whether the scheme is open-ended, close-
ended, an interval fund etc. and the scheme type should be in line with SEBI
circular on categorization.
v. Scheme Information Document has two sections- Section I and Section II. While
Section I contains scheme specific information that is dynamic, Section II contains
elaborated provisions (including references to applicable
Regulations/circulars/guidelines) with reference to information/disclosures
provided in Section I.
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Part I. HIGHLIGHTS/SUMMARY OF THE SCHEME
Sr. No. Title Description
I. Name of the scheme  (As per SEBI circular on categorization and
rationalization of mutual fund schemes)
 Maturity/duration of scheme for close ended/Target
maturity schemes to be mentioned in the name of the
scheme
II. Category of the Scheme (As per SEBI circular on categorization and rationalization of
mutual fund schemes)
III. Scheme type  Maturity/duration of scheme for close ended/Target
maturity schemes to be mentioned (Specifying month
and year will be sufficient.)
 As per SEBI categorization circular – All Debt
schemes to include PRC description in the scheme
type
IV. Scheme code (To be disclosed after obtaining scheme code)
V. Investment objective Clear and concise Investment objective to be stated in SID and
must be true to the scheme label. It shall contain statement
“There is no assurance that the investment objective of the
Scheme will be achieved”
VI. Liquidity/listing details Provide Liquidity provisions on ongoing basis. Listing details
only to be provided if the scheme intends to list immediately
after NFO
VII. Benchmark (Total  As per AMFI Tier I benchmark
Return Index)  The name and the justification (specific to the scheme
objective) for the use of benchmark index with which the
performance of the scheme can be compared with.
 Second Tier benchmark if applicable
VIII. NAV disclosure Mention only the Daily Disclosure timings on AMFI and AMC
website. Further Details in Section II.
IX. Applicable timelines Timeline for
 Dispatch of redemption proceeds,
 Dispatch of IDCW (if applicable) etc.
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X. Plans and Options Plan- Direct Plan/Regular
Plans/Options and sub Plan Options under each
options under the Plan(s) Growth
Scheme Income Distribution cum Capital Withdrawal (IDCW) (include
facilities if applicable)
 Including Default option/ facility (as applicable)
For detailed disclosure on default plans and options, kindly
refer SAI.
XI. Load Structure Exit Load:
XII. Minimum Application  During NFO:
Amount/switch in  On continuous basis:
XIII. Minimum Additional
Purchase Amount
XIV. Minimum
Redemption/switch out
amount
XV. New Fund Offer NFO opens on:
Period This is the NFO closes on:
period during which a
new scheme sells its Minimum duration to be 3 working days and will not be kept
units to the investors. open for more than 15 calendar days
Any changes in dates will be published through notice on
AMC website i.e. …………..
The NFO period in case of ELSS schemes shall continue
to be governed by guidelines issued by Government of India.
XVI. New Fund Offer Price: price per unit
This is the price per
unit that the investors
have to pay to invest
during the NFO.
XVII. Segregated Confirmation/disclosure statement only. For Details, kindly
portfolio/side refer SAI
pocketing disclosure
XVIII Swing pricing Confirmation/disclosure statement only. For Details, kindly
. disclosure refer SAI
XIX. Stock lending/short Confirmation/disclosure statement only. For Details, kindly
selling refer SAI
XX. How to Apply and other Summary of process only. Details in section II
details
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XXII. Investor services  Contact details for general service requests:
 Contact details for complaint resolution:
XXIII Specific attribute of the
scheme (such as lock
in, duration in case of
target maturity
scheme/close ended
schemes) (as
applicable)
XXIV Special product/facility Briefly describe the facilities/products Available
available during the Facilities like:
NFO and on ongoing  Systematic Investment Plan
basis  Systematic Transfer Plan
 Systematic Withdrawal Plan
 For further details of above special products /
facilities, For Details, kindly refer SAI
XXV. Weblink A weblink wherein TER for last 6 months, Daily TER as well as
scheme factsheet shall be made available.
DUE DILIGENCE BY THE ASSET MANAGEMENT COMPANY
It is confirmed that:
(i) The Scheme Information Document submitted to SEBI is in accordance with
the SEBI (Mutual Funds) Regulations, 2026 and the guidelines and directives
issued by SEBI from time to time.
(ii) All legal requirements connected with the launching of the Scheme as also the
guidelines, instructions, etc., issued by the Government and any other
competent authority in this behalf, have been duly complied with.
(iii) The disclosures made in the Scheme Information Document are true, fair and
adequate to enable the investors to make a well informed decision regarding
investment in the Scheme.
(iv) The intermediaries named in the Scheme Information Document and Statement
of Additional Information are registered with SEBI and their registration is valid,
as on date.
(v) The contents of the Scheme Information Document including figures, data, yields
etc. have been checked and are factually correct
(vi) A confirmation that the AMC has complied with the compliance checklist
applicable for Scheme Information Documents and other than cited deviations/
that there are no deviations from the regulations
(vii) Notwithstanding anything contained in this Scheme Information Document, the
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provisions of the SEBI (Mutual Funds) Regulations, 2026 and the guidelines
there under shall be applicable.
(viii) The Trustees have ensured that the (name of the scheme/Fund) approved by
them is a new product offered by (name of the Mutual Fund) and is not a minor
modification of any existing scheme/fund/product (This clause is not applicable
to Fixed Maturity Plans and Close Ended Schemes except for those close ended
schemes which have the option of conversion into open ended schemes on
maturity and also to Interval Schemes.)
Date: Name:
Place: Designation:
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Part II. INFORMATION ABOUT THE SCHEME
A. HOW WILL THE SCHEME ALLOCATE ITS ASSETS?
This includes asset allocation table giving the broad classification of assets
and indicative exposure level in percentage terms. The asset allocation
should be consistent with the investment objective of the scheme and SEBI
circulars on Categorization and Rationalization of Mutual Fund Schemes.
Indicative allocations (% of total
Instruments assets)
Minimum Maximum
 Percentage of investment in overseas securities, derivatives for non-
hedging purposes, stock lending, securitized debt, Debt instruments with
special features (AT 1 and AT 2 Bonds), Debt Instruments with SO / CE,
InVITs, Tri-party repos, other mutual funds, repo/ reverse repo transactions in
corporate debt securities, Credit Default Swaps, covered call option etc). to
be indicated.
 In case the Scheme does not intend to invest in these securities, negative
confirmation in a table format should be provided for securities / instruments
in which the scheme will not invest.
 Cumulative gross exposure limits to be adhered in terms of SEBI Master
Circular for Mutual Funds.
 Any other information/disclosure to be added as per applicable Consolidated
checklist of standard observations.
Indicative Table (Actual instrument/percentages may vary subject to
applicable SEBI circulars)
Sl. no Type of Instrument Percentage of Master Circular
exposure reference*
1. Securities Lending
2. Equity Derivatives for
non- hedging purposes
3. Securitized Debt
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4. Overseas Securities
5. InVITS
6. AT1 and AT2 Bonds
7. Any other instrument
*SEBI Master circular for Mutual Fund references (wherever applicable) in support of
exposure limits of different types of asset classes in asset allocation shall be
provided.
Indicative table to mention express prohibition/ enablement for investment. In case
SID is silent with regards to investment in particular security/investment, the same
shall not be reflected.
Portfolio rebalancing: AMC to refer to Paragraph 1.9.1(b), Paragraph 3.11,
Paragraph 4.4.5(i) and Paragraph 4.5.5 of SEBI Master Circular for Mutual Funds
and applicable clause of Consolidated checklist of standard observations for active
and passive breach/es.
B. WHERE WILL THE SCHEME INVEST?
This includes only a list of all instruments in which the scheme will invest.
(Detailed definition and applicable Regulations/guidelines for each instrument
shall be included in Section II)
Investment in overseas securities shall be made in accordance with the
requirements stipulated by SEBI and RBI from time to time.
Any other information/disclosure to be added as per applicable Consolidated
checklist of standard observations.
C. WHAT ARE THE INVESTMENT STRATEGIES?
Information about investment approach and risk control shall be included in
simple terms. Due care shall be taken in deciding whether the investment
strategy is "Passive"/"Active". Investment strategy shall match the asset
allocation pattern of the scheme. (Example: Fund of Funds with multiple funds
cannot be considered as a scheme with passive investment strategy since
fund manager has scope for active selection and management of funds).
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Further, details on generic concepts such as macroeconomic trends may
not be provided unless there are investment strategies derived specifically
from these concepts.
Disclosure for derivatives to be provided in summary form. For detailed
derivative strategies, please refer to SAI.
Further, Portfolio turnover policy, particularly for equity oriented schemes
shall also be disclosed. In discussing the investment strategies, the scheme
shall briefly discuss in the Scheme Information Document the probable effect
of such strategies on the rate of the total portfolio turnover of the scheme, if
such effects are significant and also other consequences which will result
from the higher portfolio turnover rate e.g. higher brokerage and transaction
cost.
D. HOW WILL THE SCHEME BENCHMARK ITS PERFORMANCE?
Benchmark (Total Returns Index): AMFI prescribed benchmark for all
schemes except ETFs / Index Funds and FOFs with single underlying Fund.
The name and the justification (specific to the scheme objective) for the use
of benchmark index with which the performance of the scheme can be
compared with.
E. WHO MANAGES THE SCHEME?
Name, age, tenure of managing the scheme, educational qualification and
experience of the fund manager to the scheme to be disclosed. The
experience of the fund manager shall include last 10 years’ experience and
also the name of other schemes under his /her management.
Dedicated fund manager is optional for commodity based funds and overseas
investments as per applicable SEBI circular.
F. HOW IS THE SCHEME DIFFERENT FROM EXISTING SCHEMES OF THE MUTUAL
FUND?
Provide a reference list of existing schemes and a functional website link
that contains detailed comparative table.
G. HOW HAS THE SCHEME PERFORMED (if applicable)?
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[In case of a new Compounded Scheme Returns Benchmar Returns
Annualised % k
scheme, this is not Returns the last
Returns %
for 1
applicable hence give Returns the last
year
the for 3
statement-“This Returns for the last
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is a new scheme and Returns since
inception
does not have any
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am per adjacent
H. ADDITIONAL SCHEME RELATED DISCLOSURES
i. Scheme’s portfolio holdings (top 10 holdings by issuer and fund allocation
towards various sectors to be provided through a functional website link that
contains detailed description.)
ii. Disclosure of name and exposure to Top 7 issuers, stocks, groups and
sectors as a percentage of NAV of the scheme in case of debt and equity
ETFs/index funds through a functional website link that contains detailed
description
iii. Functional website link for Portfolio Disclosure - Fortnightly / Monthly.
iv. Functional website link to the respective addendums to the SID after the last
update of SID
v. Portfolio Turnover Ratio
vi. Aggregate investment in the Scheme by:
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Sr. Category of Persons Net Value Market Value ( in Rs.)
No.
1. Concerned scheme’s Fund Units NAV per unit
Manager(s)
For any other disclosure w.r.t investments by key personnel and AMC
directors including regulatory provisions in this regard kindly refer SAI.
vii. Investments of AMC in the Scheme – Details to be provided vide functional
website link. The AMC shall not invest in any of the schemes unless full
disclosure of its intention to invest has been made in the Scheme Information
Document and that the AMC shall not be entitled to charge any fees on such
investment
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Part III- OTHER DETAILS
A. COMPUTATION OF NAV
Disclosure pertaining to illustration on computation of NAV and Methodology
for calculation of sale and re-purchase price of the units of mutual fund scheme.
Disclosure to the effect that the repurchase price shall not be lower than
97% of the NAV. For other details such as policies w.r.t computation of NAV,
rounding off, investment in foreign securities, procedure in case of delay in
disclosure of NAV etc. refer to SAI
B. NEW FUND OFFER (NFO) EXPENSES
These expenses are incurred for the purpose of various activities related to the NFO
like sales and distribution fees paid marketing and advertising, registrar expenses,
printing and stationary, bank charges etc. Details of source for meeting these
expenses may be disclosed. AMC to ensure that no NFO expenses will be / were
charged to the Scheme.
C. ANNUAL SCHEME RECURRING EXPENSES
These are the fees and expenses for operating the scheme. These expenses
include Investment Management and Advisory Fee charged by the AMC,
Registrar and Transfer Agents’ fee, marketing and selling costs etc. as given
in the table below:
The AMC has estimated that upto % of the daily net assets of the scheme shall
be charged to the scheme as expenses (Give slab wise break up depending on the
assets under management. Give plan/option wise break up if the expense structures
are different). For the actual current expenses being charged, the investor shall refer
to the website of the mutual fund.
% p.a. of
daily Net
Expense Head
Assets*
(Estimated
p.a.)
Investment Management & Advisory Fee
Audit fees/fees and expenses of trustees
Custodial Fees
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Registrar & Transfer Agent Fees including cost of providing
account
statements / IDCW / redemption cheques/ warrants
Marketing & Selling Expenses including fees, commission and
charges towards distribution of mutual fund schemes
Costs related to investor communications
Costs of fund transfer from location to location
Cost towards investor education, awareness and financial inclusion
Brokerage & transaction cost pertaining to execution of trade
Cost of statutory advertisements
Other Expenses (to be specified as per Reg 66 of SEBI MF
Regulations)
Maximum Total expenses ratio (TER) permissible under
Regulation 66
Statutory levies (including GST) on all expenses excluding brokerage
and transaction cost
Statutory levies (including GST) on brokerage and transaction cost
*Impact of TER on returns of both Direct plan and Regular plan through an
illustration may be provided.
Disclosure of additional incentives for gross new inflows from specified cities
and specified type of investors.
In case of Fund of Funds scheme, it shall be disclosed that the investors are
bearing the recurring expenses of the scheme, in addition to the expenses of
other schemes in which the Fund of Funds Scheme makes investments. Also,
provide expense ratio of underlying scheme(s) of FOF schemes.
Any other information/disclosure to be added as per applicable Consolidated
checklist of standard observations.
D. LOAD STRUCTURE
Exit Load is an amount which is paid by the investor to redeem the units from the
scheme. Load amounts are variable and are subject to change from time to time.
For the current applicable structure, please refer to the website of the AMC (www-
-----) or may call at (toll free no.) or your distributor.
Type of Load Load chargeable (as %age of NAV)
Exit To be prescribed by respective AMC
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Section II
I. Introduction
A. Definitions/interpretation
Functional website link that contains detailed description
B. Risk factors
- Scheme specific risk factors
Include risk factors associated with investment in various instruments in
which the scheme intends to invest as indicated in asset allocation section.
C. Risk mitigation strategies
II. Information about the scheme:
A. Where will the scheme invest – Detailed description of the instruments
(including overview of debt markets in India, if applicable) mentioned in Section I
B. What are the investment restrictions?
All the investment restrictions as contained in the Sixth Schedule to SEBI
(Mutual Funds) Regulations, 2026 and circulars issued thereunder,
applicable to the scheme shall be incorporated. Further in case the fund
follows any internal norms vis-à-vis limiting exposure to a particular scrip or
sector, etc. apart from the aforementioned investment restrictions the same
needs to be disclosed.
C. Fundamental Attributes
Following are the Fundamental Attributes of the scheme, in terms of
Paragraph 1.9 of SEBI Master Circular for Mutual Funds.
(i) Type of a scheme
- Open ended/Close ended/Interval scheme
- Equity Schemes/Debt schemes/Hybrid Schemes/ Any other type of
Scheme
(ii) Investment Objective
- Main Objective - Growth/Income/Both.
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- Investment pattern - The Tentative portfolio breakup of Equity/Debt/Money
Market instruments, other permitted securities and such other securities as
may be permitted by the Board from time to time with minimum and maximum
asset allocation, while retaining the option to alter the asset allocation for a
short term period on defensive considerations.
(iii) Terms of Issue
- Liquidity provisions such as listing, repurchase, redemption.
- Aggregate fees and expenses charged to the scheme.
- Any safety net provided.
In accordance with Regulation 22(9)(c)) of the SEBI (MF) Regulations, 2026
and Paragraph 1.9.2 of SEBI Master Circular for Mutual Funds the Trustees
shall ensure that no change in the fundamental attributes of the Scheme(s)
and the Plan(s) / Option(s) thereunder or the trust or fee and expenses
payable or any other change which would modify the Scheme(s) and the
Plan(s) / Option(s) thereunder and affect the interests of Unitholders is
carried out unless:
• SEBI has reviewed and provided its comments on the proposal
• A written communication (including digital modes such as email/sms etc.)
about the proposed change is sent to each Unitholder and details as specified by
the Board are appropriately displayed on the website of the AMC; and
• The Unitholders are given an option for a period of atleast 30 calendar days
to exit at the prevailing NAV without any exit load
D. Index methodology (for index funds, ETFs and FOFs having one
underlying domestic ETF)- Disclosures regarding the index, index eligibility
criteria, methodology, index service provider, index constituents, impact cost
of the constituents
E. Principles of incentive structure for market makers (for ETFs)
F. Floors and ceiling within a range of 5% of the intended allocation against
each sub class of asset, as per Paragraph 14.5 of SEBI master circular for
mutual funds (only for close ended debt schemes)
G. Other Scheme Specific Disclosures:
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Listing and transfer of units
Dematerialization of units
Minimum Target amount
(This is the minimum amount
required to operate the scheme
and if this is not collected during
the NFO period, then all the
investors would be refunded
the amount invested
without any return.)
Maximum Amount to be raised
(if any)
Dividend Policy ( IDCW )
Allotment (Detailed procedure) Mention, the procedure for allotment and dispatch of
account statements/unit certificates. Indicate the time
period. Mention
the number of days within which the statement
shall be dispatched to the unitholders who subscribe to
the units when
the scheme is open for continuous subscription after
NFO as per the applicable guidelines.
Refund If application is rejected, full amount will be refunded
within 5 working days of closure of NFO. If refunded later
than 5 working days @ 15% p.a. for delay period will
be paid and
charged to the AMC.
Who can invest
This is an indicative list and
investors shall consult their
financial advisor to ascertain
whether the scheme is
suitable to their risk profile.
Who cannot invest
How to Apply and other details Details regarding-
1. availability of application form from either the
Investor Service Centers (ISCs)/Official Points of
Acceptance (OPAs) of AMC or may be downloaded
from the website of AMC (Provide website link) shall
be specified
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Please refer to the SAI and Application form for the
instructions.
2. link for the list of official points of acceptance,
collecting banker details etc.
3. name, address and contact no. of Registrar and
Transfer Agent (R&T), email id of R&T, website
address of R&T, official points of acceptance,
collecting banker details etc. on back cover page.
To inform investors that it is mandatory to mention their
bank account numbers in their applications/requests for
redemption.
The policy regarding reissue of
repurchased units, including the
maximum extent, the manner of
reissue, the entity (the scheme or
the
AMC) involved in the same.
Restrictions, if any, on the right
to freely retain or dispose of units
being offered.
Cut off timing for subscriptions/
redemptions/ switches
This is the time before which your
application (complete in all
respects) should reach the
official points of
acceptance.
Minimum amount for
purchase/redemption/switches
(mention the provisions for
ETFs, as may be applicable, for
direct subscription/redemption
with AMC.
Accounts Statements The AMC shall send an allotment confirmation
specifying the units allotted by way of email and/or SMS
within 5 working days of receipt of valid
application/transaction to the Unit holders registered e-
mail address and/ or mobile number (whether units are
held in demat mode or in account statement form).
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A Consolidated Account Statement (CAS) detailing all
the transactions across all mutual funds (including
transaction charges paid to the distributor) and holding
at the end of the month shall be sent to the Unit holders
in whose folio(s) transaction(s) have taken place during
the month by mail or email on or before 15th of the
succeeding month.
Half-yearly CAS shall be issued at the end of every six
months (i.e. September/ March) on or before 21st day of
succeeding month, to all investors providing the
prescribed details across all schemes of mutual funds
and securities held in dematerialized form across demat
accounts, if applicable
For further details, refer SAI.
Dividend/ IDCW The payment of dividend/IDCW to the unitholders shall
be
made within seven working days from the record date.
Redemption The redemption or repurchase proceeds shall be
dispatched to the unitholders within three working days
from the date of redemption or repurchase.
For list of exceptional circumstances refer Paragraph
15.3.3 of SEBI Master Circular for Mutual Funds.
For schemes investing atleast 80% of total assets in
permissible overseas investments (as per Paragraph
13.11 of SEBI Master Circular for Mutual Funds), the
transfer of redemption or repurchase proceeds to the
unitholders shall be made within five working days from
the date of redemption or
repurchase.
Bank Mandate
Delay in payment of redemption /
The Asset Management Company shall be liable to pay
repurchase proceeds/dividend
interest to the unitholders at rate as specified vide
Paragraph 15.4 of SEBI Master Circular for Mutual
Funds by SEBI for the period of such delay
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Unclaimed Redemption and
Income Distribution cum Capital
Withdrawal Amount
Disclosure w.r.t investment by
minors
Any other disclosure in terms of
Consolidated Checklist on
Standard Observations
III. Other Details
A. In case of Fund of Funds Scheme, Details of Benchmark, Investment Objective,
Investment Strategy, TER, AUM, Year wise performance, Top 10 Holding/ link to Top
10 holding of the underlying fund should be provided
B. Periodic Disclosures such as monthly disclosures, half yearly results, annual
report
 Specify timelines of these disclosures and details of where they are disclosed.
(such as “Refer to AMC website, SAI, AMFI website for further details etc. Provide
a functional link for each respective field”)
 Any disclosure in terms of Consolidated Checklist on Standard Observations
C. Transparency/NAV Disclosure (Details with reference to information
given in Section I)
D. Transaction charges and stamp duty- Indicate only the amount of transaction
charges and stamp duty applicable. Details to be provided in SAI.
E. Associate Transactions- Please refer to Statement of Additional Information (SAI)
F. Taxation- For details on taxation please refer to the clause on Taxation in
the SAI apart from the following:
Resident Investors Mutual Fund
Tax on dividend
Capital gain
Long Term:
Short Term:
G. Rights of Unitholders- Please refer to SAI for details.
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H. List of official points of acceptance: Details to be uploaded and updated on
a functional website link
I. Penalties, Pending Litigation or Proceedings, Findings of Inspections or
Investigations For Which Action May Have Been Taken Or Is In The
Process Of Being Taken By Any Regulatory Authority
AMCs are required to disclose penalties, pending litigation etc. for the last 5
financial years and wherever the amount of penalty is more than 5 lakhs.
- Further, AMCs are required to provide the functional link for said point and update the
data on real time basis (along with the date of updation mentioned therein), upon receipt
of information by the AMC. The disclosure of penalties, pending litigations etc. in the
functional link will be as per the sub-headings mentioned in section VI of the format of
SID prescribed under Format No. 5A. AMCs to ensure real time upation of data on the
said link.
- Any disclosure in terms of Consolidated Checklist on Standard Observations
Note- Changes made to align with regulatory mandate shall not be considered as fundamental
attribute change.
******
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B. STATEMENT OF ADDITIONAL INFORMATION (SAI)
This Statement of Additional Information (SAI) contains details of -------Mutual Fund, its constitution, and certain tax, legal and general
information. It is incorporated by reference (is legally a part of the Scheme Information Document).
This SAI is dated ________.
I. INFORMATION ABOUT SPONSOR, AMC AND TRUSTEE COMPANIES
A. Constitution of the Mutual Fund
ABC (the “Mutual Fund”) has been constituted as a trust on _______ in accordance with the provisions
of the Indian Trusts Act, 1882 (2 of 1882) with XYZ, as the Sponsor and DEF as the Trustee. The
Trust Deed has been registered under the Indian Registration Act, 1908. The Mutual Fund was
registered with SEBI on ____________under Registration Code MF-
B. Sponsor
ABC Mutual Fund is sponsored by XYZ. The Sponsor is the Settler of the Mutual Fund Trust. The
Sponsor has entrusted a sum of Rs._______ to the Trustee as the initial contribution towards the
corpus of the Mutual Fund.
Financial Performance of the Sponsor (past three years):
Particulars Year 1 Year 2 Year 3
Net Worth
Total Income
Profit after tax
Assets Under
Management (if
applicable)
C. The Trustee
DEF (the “Trustee”), through its Board of Directors, shall discharge its obligations as trustee of the
ABC Mutual Fund. The Trustee ensures that the transactions entered into by the AMC are in
accordance with the SEBI Regulations and will also review the activities carried on by the AMC.
Details of Trustee Directors:
Name Age Qualification Brief Experience
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PQR 45 CA PQR is a fellow member of the Institute of
Chartered Accountant and is in practice from
1978. He is a Senior Partner with a firm of
Chartered Accountants in India. He is also a
director on the Board of various companies
and trustee of charitable institutions
State the responsibilities and duties of the Trustee as well as the specific and general due diligence.
II. Asset Management Company
STP Ltd. is a private limited company incorporated under the Companies Act, 1956 on ________,
having its Registered Office at _____________________. STP Ltd. has been appointed as the Asset
Management Company of the -----------Mutual Fund by the Trustee vide Investment Management
Agreement (IMA) dated ___________, and executed between DEF and STP.
Details of AMC Directors:
Name Age Qualification Brief Experience
UVT 45 CA UVT is a fellow member of the Institute of
Chartered Accountant and is in practice from
1978. He is a Senior Partner with a firm of
Chartered Accountants in India. He is also a
director on the Board of various companies
and trustee of charitable institutions
State the Duties and obligation of the AMC as specified in the SEBI Mutual Fund Regulations on
www.sebi.gov.in.
Information on Key Personnel:
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Name Age Designati Education Total No. of Nature of past
on al years of experience
Qualificati Experience including
on assignments held
during the last 10
years
CEO
CIO
Operations
Head
Compliance
Officer
Sales Head
Risk Manager
Investor
Relations Officer
(The AMC may decide on the key personnel it wants to mention in the SAI in addition to the persons
mentioned above.)
III. Service providers
A. Custodian
Name, Address and SEBI Registration Number of the Custodian for the scheme
B. Transfer agent
Name and principal business address of the Registrars, Transfer Agents and the dividend paying
agent. A statement to the effect that the Board of the Trustees and the AMC have ensured that the
Registrar has adequate capacity to discharge responsibilities with regard to processing of applications
and dispatching unit certificates to unitholders within the time limit prescribed in the Regulations and
also has sufficient capacity to handle investor complaints. Also state the SEBI Registration Number
of Registrars, Transfer Agents.
C. Statutory auditor
Name and Address of the statutory auditor for Mutual Fund.
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D. Legal counsel
Name and Address of the Legal Counsel
E. Fund Accountant
Name and Address of the fund accountant
F. Collecting Bankers
Name, Address and SEBI Registration Number
IV. Condensed financial information (CFI) for all the schemes launched by MF during the last three
fiscal years (excluding redeemed schemes) in the format given below
HISTORICAL PER UNIT STATISTICS SCHEME NAME
YR. 1 YR. 2 YR. 3
NAV at the beginning of the year (as on
April 1)
Dividends*
NAV at the end of the year (as on March
31)
Annualised return**
Net Assets end of period (Rs. Crs.)
Ratio of Recurring Expenses to net assets
* Excluding dividend details of liquid scheme.
** Only for growth option. Explanation to be given for not providing annualised return for options other
than growth option. Absolute returns to be provided for schemes less than one year.
V. RISK FACTORS
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A. Standard Risk Factors
a. Standard Risk Factors for investments in Mutual Fund
b. Risk factors of not maintaining average AUM of Rs. 20 crore on half yearly rolling basis
(Applicable only for open ended debt oriented schemes)
c. Risks associated with different derivative strategies
d. Other risk factors (viz. Swing pricing, investment in CDMDF, LRM etc.)
B. Special Considerations
VI. HOW TO APPLY?
Describe briefly the manner in which the units of the scheme being offered under the scheme
information document may be purchased by the prospective investor. The descriptions should
emphasise the procedures to be followed. Also provide the details of KYC requirement for unit
holders.
A. Special Products / Facilities offered by the AMC / Schemes
B. Default scenarios available to the investors under plans/options of the Schemes.
VII. RIGHTS OF UNITHOLDERS OF THE SCHEME
1. Unit holders of the Scheme have a proportionate right in the beneficial ownership of the assets
of the Scheme.
2. When the Mutual Fund declares an Income Distribution cum Capital Withdrawal
(IDCW)/dividend under a scheme, IDCW/ dividend warrants shall be dispatched to the Unit
Holders within 7 working days from the record date of IDCW/dividend. Consolidated Account
Statement (‘CAS’) at mutual fund industry level for each calendar month will be issued on or
before 15th day of succeeding month to all unit holders having financial transactions and who
have provided valid Permanent Account Number (PAN). For folios not included in the CAS,
the AMC shall issue a monthly account statement to the unit holders, pursuant to any financial
transaction done in such folios; the monthly statement shall be sent on or before 15th day of
succeeding month. In case of a specific request received from the unit holders, the AMC shall
provide the account statement to the unit holder within 5 business days from the receipt of
such request. If a Unit holder so desires the Mutual Fund shall issue a Unit certificate (non-
transferable) within 5 Business Days of the receipt of request for the certificate.
3. The Mutual Fund shall dispatch redemption or repurchase proceeds within 3 working days of
accepting the valid redemption or repurchase request. For schemes investing at least 80% of
total assets in such permissible overseas investments, 5 Working Days of accepting the valid
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redemption or repurchase request. Further, in case of exceptional scenarios as prescribed by
AMFI vide its communication no. AMFI/ 35P/ MEM-COR/ 74 / 2022-23 dated January 16,
2023, read with Paragraph 15.3.3 of SEBI Master Circular for Mutual Funds, the AMC may
not be able to adhere with the timelines prescribed above.
4. The Trustee is bound to make such disclosures to the Unit holders as are essential in order to
keep the unitholders informed about any information known to the Trustee which may have a
material adverse bearing on their investments.
5. The appointment of the AMC for the Mutual Fund can be terminated by majority of the
Directors of the Trustee Board or by 75% of the Unit holders of the Scheme.
6. 75% of the Unit holders of a Scheme can pass a resolution to wind- up a Scheme.
7. The Trustee shall obtain the consent of the Unit holders:
 whenever required to do so by SEBI, in the interest of the Unit holders.
 whenever required to do so if a requisition is made by three- fourths of the Unit holders
of the Scheme.
 when the majority of the trustees decide to wind up a scheme in terms of Regulation
36(2)(a) of SEBI (Mutual Funds) Regulations, 2026 or prematurely redeem the units of
a close ended scheme.
8. The trustees shall ensure that no change in the fundamental attributes of any scheme, the
fees and expenses payable or any other change which would modify the scheme and affect
the interest of the unit holders is carried out by the asset management company, unless it
complies with Regulation 22(9)(c) of SEBI (Mutual Funds) Regulations, 2026.
9. In specific circumstances, where the approval of unitholders is sought on any matter, the same
shall be obtained by way of a postal ballot or such other means as may be approved by the
Board.
VIII. INVESTMENT VALUATION NORMS FOR SECURITIES AND OTHER ASSETS
This section shall disclose the Valuation of Assets and properties of the scheme in accordance with
Seventh Schedule of SEBI (Mutual Funds) Regulations, 2026 and applicable circulars/guidelines.
COMPUTATION OF NAV
A. Policy of computation of NAV
B. Policy for computation of NAV in foreign securities
C. Procedure in case of delay in disclosure of NAV
IX. TAX & LEGAL & GENERAL INFORMATION
A. Taxation on investing in Mutual Funds
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This section shall disclose the applicable tax provisions for Mutual Fund and for investments in
Mutual Fund scheme.
B. Legal Information
This section may include information on Nomination Facility, KYC Requirements,
Requirements of Prevention of Money Laundering Act, Transfer and transmission of units,
Duration of the scheme/Winding up, Procedure and manner of winding up etc.
C. General Information
1. Inter-Scheme Transfer of Investments:
Transfers of investments from one scheme to another scheme in the same mutual fund shall
be allowed only if -
(a) such transfers are done at the prevailing market price for quoted instruments on spot
basis.
Explanation : “spot basis” shall have same meaning as specified by stock exchange for spot
transactions.
(b) the securities so transferred shall be in conformity with the investment objective of the
scheme to which such transfer has been made.
2. Aggregate investment in the Scheme under the following categories:
Please find below the aggregate investment in the respective Scheme(s) by Board of Directors
of ________ (AMC) and key personnel as on May 31 _____:
Scheme Name Aggregate amount invested in the Scheme as on May 31,
_____(market value in Rs.)
AMC’s Board of Key personnel Fund Manager
Directors (excluding Fund
Manager)
3. Dematerialisation and Rematerialisation procedures
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4. ASBA disclosures
5. Portfolio Turnover Details
D. Associate Transactions
The following disclosures, summarising historical information pertaining to the last three fiscal years
of the schemes of the Mutual Fund under the management of the Asset Management Company
reflecting associate transactions and the manner in which such transactions affected the performance
of schemes of the Mutual Fund shall be made. The disclosures shall include, subscription by the
schemes in issues lead managed by associate companies, total business given to associate brokers
and the percentage of brokerage commission paid to them and any distribution of units performed by
associate companies.
This section shall also disclose:
(a) the policy for investing in group companies of the sponsor of a Mutual Fund that is followed/to be
followed by the Mutual Fund, including the aggregate market value of investments in group companies
of the Sponsor and asset Management Company by all the schemes of the Mutual Fund and its
percentage of the aggregate net asset value of the Mutual Fund,
(b) in case any scheme of the Mutual Fund has invested more than 25% of its net assets in group
companies, this shall be disclosed.
(c) names of associates of the Sponsor or the Asset Management Company with which the Mutual
Fund proposes to have dealings, transactions and those whose services may be used for marketing
and distributing the scheme and the commissions that may be paid to them.
E. Documents Available for Inspection
The following documents will be available for inspection at the office of the Mutual Fund at
________________________________ during business hours on any day (excluding Saturdays,
Sundays and public holidays):
 Memorandum and Articles of Association of the AMC
 Investment Management Agreement
 Trust Deed and amendments thereto, if any
 Mutual Fund Registration Certificate
 Agreement between the Mutual Fund and the Custodian
 Agreement with Registrar and Share Transfer Agents
 Consent of Auditors to act in the said capacity
 Consent of Legal Advisors to act in the said capacity
 Securities and Exchange Board of India (Mutual Funds) Regulations, 2026 and amendments from
time to time thereto.
 Indian Trusts Act, 1882.
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F. Investor Grievances Redressal Mechanism
Describe briefly the investors' complaints history for the last three fiscal years of existing schemes
and the redressal mechanism thereof. The SAI should include data updated every two months on the
number of complaints received, redressed and pending with the Mutual Fund.
G. Information pertaining to Investments by the Schemes of the Fund
1. Derivative strategies
2. Swing Pricing
3. Provisions on creation of Segregated portfolio/Side pocketing
4. Short selling / stock lending
H. Transaction Charges and Stamp Duty
X. DISCLOSURES AND REPORTS BY THE FUND
1. Account Statement/Consolidated Account Statement
2. Monthly Portfolio Disclosures/Financial Results
3. Half Yearly Results
4. Annual Report
Notwithstanding anything contained in this Statement of Additional Information, the
provisions of the SEBI (Mutual Funds) Regulations, 2026 and the guidelines thereunder shall
be applicable.
Instruction:
A Mutual Fund is free to add any other disclosure, which in the opinion of the Trustees of the Mutual
Fund (Trustees) or the Asset Management Company (AMC) is material, provided that such
information is not presented in an incomplete, inaccurate or misleading manner. Care should be taken
to ensure that inclusion of such information does not, by virtue of its nature, or manner of presentation,
obscure or impede understanding of any information that is required to be included under the Scheme
Information Document and Statement of Additional Information.
Note:
The wording in italics is explanatory commentary/instructions.
The words in Arial font are the text to be used in the Statement of Additional Information, as
applicable.
*****
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Page 642 of 748
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C. KEY INFORMATION MEMORANDUM (KIM)527
NAME OF THE SCHEME
(Type of the Scheme)
1. Name and type of the scheme to be aligned with SEBI Circulars on Categorization and
Rationalization of Mutual Fund Schemes,
2. As per SEBI Circulars on Potential Risk Class (PRC) Matrix for debt schemes, type of scheme
to include PRC description
3. As per SEBI Circulars on Potential Risk Class (PRC) Matrix for debt schemes, the PRC matrix
along with the mark for the cell in which the scheme resides shall be disclosed on front page
of Key Information Memorandum.
4. For Index Funds / Index ETF - Name of scheme shall include complete name of underlying
Index.
5. In case of FOF’s where single fund is underlying (Feeder Funds): To include the complete
name of the underlying fund in the name of the scheme.
6. Product Labelling and Risk-o-meter of the Scheme and Benchmark should be disclosed.
7. In case the scheme is listed/proposed to be listed (ETFs/close ended etc.), the Scrip Code
issued by the stock exchange after listing to be mentioned below the Scheme Name.
This product is suitable Scheme Benchmark Riskometer (as
for Riskometer applicable)
investors who are
seeking*:
As per AMFI Tier I
Benchmark i.e. ………………
(as applicable)
 The above product labelling assigned during the New Fund Offer (NFO) is based on internal
assessment of the scheme characteristics or model portfolio and the same may vary post NFO
when the actual investments are made.
527 SEBI/IMD/CIR No. 5/126096/08 dated May 23, 2008
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Offer for Units of Rs. -- Per Unit for cash during the
New fund Offer Period and at NAV based prices upon re-opening
New Fund Offer Opens on:
New Fund Offer Closes on:
Scheme Re-opens for continuous sale and
repurchase on:
Name of Mutual Fund :
Name of Asset Management Company :
Name of Trustee Company :
Addresses, Website of the entities
This Key Information Memorandum (KIM) sets forth the information, which a prospective investor
ought to know before investing. For further details of the scheme/Mutual Fund, due diligence
certificate by the AMC, Key Personnel, investors’ rights & services, risk factors, ,penalties &
pending litigations etc. investors should, before investment, refer to the Scheme Information
Document and Statement of Additional Information available free of cost at any of the Investor
Service Centres or distributors or from the website www. -----.
The Scheme particulars have been prepared in accordance with Securities and
Exchange Board of India (Mutual Funds) Regulations 2026, as amended till date, and
filed with Securities and Exchange Board of India (SEBI). The units being offered for
public subscription have not been approved or disapproved by SEBI, nor has SEBI
certified the accuracy or adequacy of this KIM.
This Key Information Memorandum is dated _______ .
Investment Objective
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This includes asset allocation table giving the broad classifica
Asset Allocation Pattern
tion of assets and indicative exposure level in percentage ter
of the scheme
ms. The asset allocation should be consistent with the invest
ment objective of the scheme and SEBI circulars on Categori
zation and Rationalization of Mutual Fund Schemes.
Indicative allocations (% of
Instrume total assets)
nts Maximum Minimum
 Percentage of investment in overseas securities, derivatives
for non-hedging purposes, stock lending, securitized debt, Debt
instruments with special features (AT 1 and AT 2 Bonds), Debt
Instruments with SO / CE and InVITs, Tri-party repos, other
mutual funds, repo/ reverse repo transactions in corporate debt
securities, Credit Default Swaps, covered call option etc). to be
indicated.
 In case the Scheme does not intend to invest in these securities,
negative confirmation in a table format should be provided for
securities / instruments in which the scheme will not invest.
 Cumulative gross exposure limits to be adhered in terms of
Master Circular for Mutual Funds
 Any other information/disclosure to be added as per applicable
Consolidated checklist of standard observations.
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Indicative Table (Actual instrument/percentages may vary subject t
o applicable SEBI circulars)
Sl. no Type of Instrument Percentage of Master Circular
exposure references*
1. Securities Lending
2. Equity Derivatives
for non- hedging
purposes
3. Securitized Debt
4. Overseas Securities
5. InVITS
6. AT1 and AT2 Bonds
7. Any other instrument
*SEBI Master circular for Mutual Funds references (wherever applicable)
in support of exposure limits of different types of asset classes in asset
allocation shall be provided.
Indicative table to mention express prohibition/ enablement for
investment. In case SID is silent with regards to to investment in
particular security/investment, the same shall not be reflected.
Portfolio rebalancing: AMC to refer to Paragraph 1.9.1(b), Paragraph
3.11, Paragraph 4.4.5(i) and Paragraph 4.5.5 of SEBI Master Circular
for Mutual Funds and applicable clause of Consolidated checklist of
standard observations for active and passive breach/es.
The aforesaid instances have resulted due to alignment with regulatory
mandate, Fundamental attribute change may not be applicable for
AMCs.
Investment Strategy
Risk Profile of the Mutual Fund Units involve investment risks including the possible loss of
Scheme principal. Please read the SID carefully for details on risk factors before
investment. Scheme specific Risk Factors are summarized below:
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For details on risk factors and risk mitigation measures, please refer SID.
Plans/Options
Applicable NAV (after
the scheme opens for
subscriptions and
redemptions )
Minimum Application Purchase Additional
Amount/ Number of Purchase 1.1.1.1.1.1 Redemption
Units
Despatch of Redemption: Within ____ working days of the receipt of the redemption
Redemption Request request at the authorised centre of the ------- Fund .
Benchmark Index
Dividend Policy
Name of the Fund
Manager including the
tenure for which the
fund manager has been
managing the scheme
Name of the Trustee
Company
Performance of the Compounded Scheme Returns % Benchmark Returns
scheme : Annualised Returns %
Returns for the last 1
year
[In case of a new scheme, Returns for the last 3
the statement should be years
given “This scheme is a Returns for the last 5
new scheme and does years
not have any Returns since
performance track inception
record”]
Absolute Returns for each financial year for the last 5 years
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Or
[In case of a scheme in
existence, the return
figures shall be given for
that scheme only, as per
the For a scheme which is
in existence for more than
1 year, the returns given
will be Compounded
Annualised Returns and
for scheme which is in
existence for less than 1
year, the returns would be
absolute returns since
inception.] Absolute
returns for each financial
year for the last 5 years
shall be represented by
means of a bar diagram
as per the adjacent
format.]
Additional Scheme 1. Scheme’s portfolio holdings (top 10 holdings by issuer and fund
Related Disclosures allocation towards various sectors to be provided through a
functional website link that contains detailed description.)
2. Disclosure of name and exposure to Top 7 issuers, stocks, groups
and sectors as a percentage of NAV of the scheme in case of debt
and equity ETFs/index funds through a functional website link that
contains detailed description
3. Portfolio Turnover Ratio
Expenses of the New Fund Offer Period
Scheme
Continuous Offer
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Exit load :
Exit load :
Load Structure
Give slab wise break up depending on the assets under management.
Give plan/option wise break up if the expense structures are different. For
the actual current expenses being charged, the investor should refer to
Recurring expenses
the website of the mutual fund.
Actual expenses for the previous financial year: ---- (Not Applicable in
case of a new scheme)
The maximum limit of recurring expenses that can be charged to the
Scheme would be as per Regulation 66 of the SEBI (MF) Regulation,
2026. Investors are requested to read “Section- Annual Scheme
Recurring Expenses” in the SID.
In case of FoF schemes, provide expense ratio of underlying scheme(s).
Tax treatment for the Investor will be advised to refer to the details in the Statement of Additional
Investors (Unitholders) Information and also independently refer to his tax advisor.
Mention only the Daily Disclosure timings on AMFI and AMC website.
Daily Net Asset Value
(NAV) Publication
For Investor Grievances Name and Address of
please contact Registrar
Unitholders’ Give the frequency and the policy of the fund house for the providing the
Information Accounts Statement, Annual Financial results and Half yearly portfolio to
the investors.
N.B. Data and information shall be up-to-date but in no case older than 30 calendar days from
the date of KIM
*****
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D. INVESTMENT STRATEGY INFORMATION DOCUMENT (ISID)
Front Cover Page
INVESTMENT STRATEGY INFORMATION DOCUMENT
SECTION 1
NAME OF THE INVESTMENT STRATEGY
(Type of Investment Strategy)
1. Name and type of the Investment strategy to be aligned with SEBI Circular on Regulatory
framework for Specialised Investment Funds (SIF).
2. In accordance with SEBI Circulars on Potential Risk Class (PRC) Matrix for debt schemes, type of
investment strategy to include PRC description and table. As per SEBI Circulars on Potential Risk
Class (PRC) Matrix for debt schemes, the PRC matrix along with the mark for the cell in which the
scheme resides shall be disclosed on front page of ISID.
3. Product Labelling and Risk- band of the Investment Strategy and Benchmark should be disclosed
4. In case the investment strategy is listed/proposed to be listed (close ended / interval investment
strategies etc.), the Scrip Code issued by the stock exchange after listing to be mentioned below the
name of the investment strategy.
This product is Risk-band* Benchmark Risk-
suitable for investors band (as applicable)
who are seeking
Risk band Level 1 Risk band Level 1
.. ..
.. ..
.. ..
Risk band Level 5 Risk band Level 5
*The Risk Band shall be as specified by AMFI.
The above product labelling assigned during the New Fund Offer (NFO) is based on internal
assessment of the characteristics of the investment strategy or model portfolio and the same may
vary post NFO when the actual investments are made
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Offer of units of Rs… each for cash during the
New Fund Offer and Continuous offer for Units at NAV based prices
New Fund Offer Opens on: _______
New Fund Offer Closes on: _______
Investment strategy re-opens on: __________
Name of SIF :
Name of the mutual fund:
Name of Asset Management Company :
Name of Trustee Company :
Addresses, Website of the entities (including SIF) :
The particulars of the investment strategy have been prepared in accordance with the
Securities and Exchange Board of India (Mutual Funds) Regulations 2026, (herein after
referred to as SEBI (MF) Regulations) as amended till date and circulars issued thereunder
filed with SEBI, along with a Due Diligence Certificate from the AMC. The units being offered
for public subscription have not been approved or recommended by SEBI nor has SEBI
certified the accuracy or adequacy of the Investment Strategy Information Document.
The Investment Strategy Information Document sets forth concisely the information about the
investment strategy that a prospective investor ought to know before investing. Before investing,
investors should also ascertain about any further changes to this Investment Strategy Information
Document after the date of this Document from the SIF/Mutual Fund / Investor Service Centres /
Website / Distributors or Brokers.
The investors are advised to refer to the Statement of Additional Information (SAI) for details
of ________ SIF, Mutual Fund, Standard Risk Factors, Special Considerations, Tax and Legal
issues and general information on www.__________. (website address).
SAI is incorporated by reference (is legally a part of the Investment Strategy
Information Document). For a free copy of the current SAI, please contact your
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nearest Investor Service Centre or log on to our website (give reference to both
the SIF website and mutual fund website)
The Investment strategy Information Document (Section I and II) should be read
in conjunction with the SAI and not in isolation.
Investors are advised to note that investments in Specialized Investment Fund involves
relatively higher risk including potential loss of capital, liquidity risk and market volatility.
Please read all investment strategy related documents carefully before making the investment
decision.
This Investment Strategy Information Document is dated ________.
Note: The wording in italics is explanatory commentary/instructions.
Instructions:
i. SIF is free to add any other disclosure, which in the opinion of the Trustees or the Asset
Management Company (AMC) is material for the investor, provided that such information is not
presented in an incomplete, inaccurate or misleading manner. Care should be taken to ensure
that inclusion of such information does not, by virtue of its nature, or manner of presentation,
obscure or impede understanding of any information that is required to be included under the
Investment Strategy Information Document.
ii. Care should be taken to ensure that the information is presented in the Investment Strategy
Information Document in simple language and in a clear, concise and easily understandable
manner.
iii. The investment strategy shall not have a name or title which may be deceptive or misleading.
Name of the investment strategy should be consistent with its statement of investment policy and
the investment strategy name should be in line with SEBI circular on Regulatory framework for
Specialised Investment Funds (SIF).
iv. The type of the investment strategy would mean whether the strategy is an equity oriented
investment strategy, debt oriented investment strategy or hybrid investment strategy, etc. and
whether the investment strategy is open-ended, close-ended or interval and the investment
strategy type should be in line with SEBI circular on Regulatory framework for Specialised
Investment Funds (SIF).
v. Investment Strategy Information Document has two sections- Section I and Section II. While
Section I contains investment strategy specific information that is dynamic, Section II contains
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elaborated provisions (including references to applicable Regulations/circulars/guidelines) with
reference to information/disclosures provided in Section I.
PART I. HIGHLIGHTS/SUMMARY OF THE INVESTMENT STRATEGY
Sr.No Title Description
I. Name of the Investment  (As per SEBI Circular on Regulatory Framework for
Strategy Specialised Investment Funds (SIF)
II. Category of the As per SEBI circular on Regulatory Framework for
Investment Strategy Specialised Investment Funds)
III. Type of Investment  Open ended/ close/interval investment strategy
Strategy  All Debt oriented investment strategies to include
PRC description in the investment strategy type in
terms of Paragraph 6.18 of Master Circular for
Mutual Funds.
IV. Investment strategy (To be disclosed after obtaining investment strategy code)
code
V. Investment objective  Clear and concise Investment objective to be stated
in ISID and must be true to the investment strategy
label. It shall contain the following statement
“There is no assurance that the investment
objective of the Investment strategy will be
achieved.
VI. Liquidity/listing details  Provide Liquidity provisions on ongoing basis.
Listing details only to be provided if the investment
strategy intends to list immediately after NFO
VII. Benchmark (Total  The name and the justification (specific to the
Return Index) investment strategy objective) for the use of
benchmark index with which the performance of the
investment strategy can be compared with.
 Second Tier benchmark if applicable
VIII. Subscription frequency
IX. Redemption frequency Equity Oriented Investment Strategies-
Daily or any lesser redemption frequency as may be
decided by AMC
Debt Oriented Investment Strategies-
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Once in a week or any lesser redemption frequency as
may be decided by AMC
Hybrid Investment Strategies-
Two Times in a week or any lesser redemption frequency
as may be
X. NAV disclosure Mention only the Daily Disclosure timings on AMFI and
AMC website. Further Details in Section II.
XI. Applicable timelines Timeline for
 Dispatch of redemption proceeds,
 Dispatch of IDCW (if applicable) etc.
XII. Plans and Options Plan- Direct Plan/Regular Plan
Plans/Options and sub
options under the Options under each Plan(s)
Investment strategy Growth
 Income Distribution cum Capital Withdrawal (IDCW)
(include facilities if applicable)
 Including Default option/ facility (as applicable)
For detailed disclosure on default plans and options, kindly
refer SAI.
XIII. Load Structure Exit Load:
XIV. Minimum Application
Amount/switch in  During NFO:
 On continuous basis:
XV. Minimum Additional
Purchase Amount
XVI. Minimum Rs. _______
Redemption/switch out The redemption will be subject to compliance with
amount provisions mentioned under “Minimum investment
threshold”
XVII. Notice Period (Maximum duration of notice period shall not exceed 15
working days.)
XVIII. New Fund Offer Period NFO opens on:
This is the period during NFO closes on:
which a new investment Minimum duration to be 3 working days and will not be kept
strategy sells its units to open for more than 15 calendar days
the investors. Any changes in dates will be published through notice on
AMC SIF website i.e. …………..
XIX. New Fund Offer Price: price per unit
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This is the price per unit
that the investors have to
pay to invest during the
NFO.
XX. Segregated Confirmation/disclosure statement only. For Details, kindly
portfolio/side pocketing refer SAI
disclosure
XXI. Swing pricing Confirmation/disclosure statement only. For Details, kindly
disclosure refer SAI
XXII. Stock lending/short Confirmation/disclosure statement only. For Details, kindly
selling refer SAI
XXIII. How to Apply Summary of process only. Details in section II
XXIV. Investor services
 Contact details for general service requests:
 Contact details for complaint resolution:
XXV. Specific attribute of the
investment strategy
(such as lock-in,
duration in case of
close ended schemes
as applicable)
XXVI. Special product/facility Briefly describe the facilities/products Available
available during the Facilities like:
NFO and on ongoing  Systematic Investment Plan
basis  Systematic Transfer Plan
 Systematic Withdrawal Plan
 For further details of above special products /
facilities, For Details, kindly refer SAI
XXVII. Weblink A weblink wherein TER for last 6 months, Daily TER as
well as investment strategy factsheet shall be made
available (when applicable)
DUE DILIGENCE BY THE ASSET MANAGEMENT COMPANY
It is confirmed that:
(i) The Investment Strategy Information Document submitted to SEBI is in accordance with the
SEBI (Mutual Funds) Regulations, 2026 and the guidelines and directives issued by SEBI from
time to time.
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(ii) All legal requirements connected with the launching of the Investment strategy as also the
guidelines, instructions, etc., issued by the Government and any other competent authority in
this behalf, have been duly complied with.
(iii) The disclosures made in the Investment Strategy Information Document are true, fair and
adequate to enable the investors to make a well informed decision regarding investment in the
Investment Strategy.
(iv) The intermediaries named in the Investment Strategy Information Document and Statement of
Additional Information are registered with SEBI and their registration is valid, as on date.
(v) The contents of the Investment Strategy Information Document including figures, data, yields
etc. have been checked and are factually correct
(vi) A confirmation that the AMC has complied with the compliance checklist applicable for
Investment Strategy Information Document other than cited deviations/ that there are no
deviations from the regulations
(vii) Notwithstanding anything contained in this Investment Strategy Information Document, the
provisions of the SEBI (Mutual Funds) Regulations, 2026 and the guidelines there under shall
be applicable.
(viii) The Trustees have ensured that the (name of the Investment Strategy) approved by them is
a new product offered by (name of the SIF) and is not a minor modification of any existing
Investment Strategy.
Date: Name:
Place: Designation:
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PART II. INFORMATION ABOUT THE INVESTMENT STRATEGY
B. HOW WILL THE INVESTMENT STRATEGY ALLOCATE ITS ASSETS?
This includes asset allocation table giving the broad classification of assets and indicative exposure
level in percentage terms. The asset allocation should be consistent with the investment objective of
the Investment Strategy and SEBI circular on Regulatory framework for Specialised Investment Funds
(SIF).
Instruments Indicative allocations
(% of total assets)
Minimum Maximum
 Percentage of investment in overseas securities, derivatives for non-hedging purposes, stock
lending, securitized debt, Debt instruments with special features (AT 1 and AT 2 Bonds), Debt
Instruments with SO / CE, InVITs, Tri-party repos, other mutual funds, repo/ reverse repo
transactions in corporate debt securities, Credit Default Swaps, covered call option etc). to be
indicated.
 In case the Investment Strategy does not intend to invest in these securities, negative
confirmation in a table format should be provided for securities / instruments in which the
Investment Strategy will not invest.
 Cumulative gross exposure limits to be adhered in terms of SEBI Master Circular for Mutual
Funds.
 Any other information/disclosure to be added as per applicable Consolidated checklist of
standard observations.
Indicative Table (Actual instrument/percentages may vary subject to applicable SEBI circulars)
Sl.no Type of Instrument Percentage of Master Circular
Exposure reference*
1. Securities Lending
2. Derivatives for non-
hedging and other than
for portfolio rebalancing
purposes
3. Securitized Debt
4. Overseas Securities
5. InVITS
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6. Debt instruments with
special features (AT1
and AT2 Bonds)
7. Debt Instruments with
SO / CE
8. Tri-party repos
9. Repo/ reverse repo
transactions in corporate
debt securities
10. Credit Default Swaps
11. Any other instrument
*SEBI Master circular for Mutual Funds references (wherever applicable) in support of exposure limits
of different types of asset classes in asset allocation shall be provided.
Timelines for deployment of funds collected by Asset Management Companies (AMCs) in New
Fund Offer (NFO) as per asset allocation of the scheme as per SEBI circular dated February
27, 2025
Portfolio rebalancing: AMC to refer to Paragraph 1.9.1(b), Paragraph 3.11, Paragraph 4.4.5(i) and
Paragraph 4.5.5 of SEBI Master Circular for Mutual Funds and applicable clause of Consolidated
checklist of standard observations for active and passive breach/es.
B. WHERE WILL THE INVESTMENT STRATEGY INVEST?
This includes only a list of all instruments in which the Investment Strategy will invest. (Detailed
definition and applicable regulations/guidelines for each instrument shall be included in Section II)
Investment in overseas securities shall be made in accordance with the requirements stipulated by
SEBI and RBI from time to time.
Any other information/disclosure to be added as per applicable Consolidated checklist of standard
observations.
C. WHAT IS THE INVESTMENT APPROACH?
Information about investment approach and risk control shall be included in simple terms. Investment
approach shall match the asset allocation pattern of the investment strategy.
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Further, details on generic concepts such as macroeconomic trends may not be provided unless there
are investment approaches derived specifically from these concepts.
Disclosure for derivatives to be provided in summary form. For detailed derivative strategies, please
refer to SAI.
Further, Portfolio turnover policy, particularly for equity oriented investment strategies shall also be
disclosed. In discussing the investment approaches, the investment strategy shall briefly discuss in
the ISID the probable effect of such approaches on the rate of the total portfolio turnover of the
investment strategy, if such effects are significant and also other consequences which will result from
the higher portfolio turnover rate e.g. higher brokerage and transaction cost.
D. HOW WILL THE INVESTMENT STRATEGY BENCHMARK ITS PERFORMANCE?
Benchmark (Total Returns Index):
The AMC shall appropriately select any of broad market indices available, as a benchmark index
depending on the investment objective and portfolio of the investment strategy.
 Equity oriented investment strategies shall be compared against a suitable broad market
index such as BSE Sensex or NSE Nifty or BSE 100 or CIRISL 500 etc
 Debt oriented investment strategies shall be compared with a suitable broad market index
that is a representative of the fund’s portfolio.
 Hybrid investment strategies shall be compared with suitable broad market benchmark
wherever available
The name and the justification (specific to the investment strategy objective) for the use of benchmark
index with which the performance of the investment strategy can be compared with.
E. WHO MANAGES THE INVESTMENT STRATEGY?
Name, age, tenure of managing the scheme, educational qualification and experience of the fund
manager to the Investment strategy to be disclosed. The experience of the fund manager shall include
last 10 years’ experience and also the name of other investment strategies under his /her
management.
Fund manager adequate expertise and experience is required for commodity based investment
strategies and overseas investments as per applicable SEBI circulars. However, appointment of
dedicated fund manager for aforesaid investments is optional.
F. HOW IS THE INVESTMENT STRATEGY DIFFERENT FROM EXISTING INVESTMENT
STRATEGIES OF THE SIF?
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Provide a reference list of existing investment strategies and a functional website link that contains
detailed comparative table.
G. HOW HAS THE INVESTMENT STRATEGY PERFORMED (if applicable)?
[In case of a new investment Compounded Investment Benchmark
strategy, this is not applicable Annualised Strategy Returns Returns %
hence give the statement- “This Returns %
investment strategy is a new
Returns for the last
strategy and does not have any
1 year
performance track record”]
Returns for the last
3 years
Or
Returns for the last
5 years
[In case of an investment strategy Returns since
in existence, the return figures inception
shall be given for that investment
strategy only. For an investment
strategy which is in existence for
more than 1 year, the returns
given will be Compounded
Annualised Returns and for
investment strategy which is in
existence for less than 1 year, the
returns would be absolute returns
since inception.
Absolute returns for each
financial year for the last 5 years
shall be represented by means of
a bar diagram as per the adjacent
format.]
Absolute Returns for each financial year for the last 5 years
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H. ADDITIONAL INVESTMENT STRATEGY RELATED DISCLOSURES
i. Investment Strategy’s portfolio holdings (top 10 holdings by issuer and fund allocation towards various
sectors to be provided through a functional website link that contains detailed description.)
ii. Functional website link for Portfolio Disclosure.
iii. Portfolio Turnover Rate particularly for equity oriented Investment Strategies shall also be
disclosed.
iv. Functional website link to the respective addendums to the SID after the last update of SID
v. Aggregate investment in the Investment Strategy by:
Sr. No. Category of Persons Net Value
Concerned Investment Units NAV per unit
Strategy’s Fund
1.
Manager(s)
For any other disclosure w.r.t investments by key personnel and AMC directors including regulatory
provisions in this regard kindly refer SAI.
vi. Investments of AMC in the Investment Strategy – Details to be provided vide functional website
link.
The AMC shall not invest in any of the Investment Strategies unless full disclosure of its intention to
invest has been made in the ISID and that the AMC shall not be entitled to charge any fees on such
investment
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PART III- OTHER DETAILS
A. COMPUTATION OF NAV
Disclosure pertaining to illustration on computation of NAV and Methodology for calculation of sale
and re-purchase price of the units of Investment Strategy.
Disclosure to the effect that the repurchase price shall not be lower than 97% of the NAV. For other
details such as policies w.r.t computation of NAV, rounding off, investment in foreign securities,
procedure in case of delay in disclosure of NAV etc. refer to SAI
B. NEW FUND OFFER (NFO) EXPENSES
These expenses are incurred for the purpose of various activities related to the NFO like sales and
distribution fees paid marketing and advertising, registrar expenses, printing and stationary, bank
charges etc. Details of source for meeting these expenses may be disclosed. AMC to ensure that no
NFO expenses will be / were charged to the Investment Strategy.
C. ANNUAL RECURRING EXPENSES
These are the fees and expenses for operating the Investment Strategy. These expenses include
Investment Management and Advisory Fee charged by the AMC, Registrar and Transfer Agents’ fee,
marketing and selling costs etc. as given in the table below:
The AMC has estimated that upto _____ % of the daily average net assets of the Investment Strategy
shall be charged to the Investment Strategy as expenses (Give slab wise break up depending on the
assets under management. Give plan/option wise break up if the expense structures are different).
For the actual current expenses being charged, the investor shall refer to the website of the SIF.
% p.a. of daily Net
Expense Head Assets* (Estimated
p.a.)
Investment Management & Advisory Fee
Audit fees/fees and expenses of trustees
Custodial Fees
Registrar & Transfer Agent Fees including cost of providing account
statements / IDCW / redemption cheques/ warrants
Marketing & Selling Expenses including fees, commission and charges
towards distribution of mutual fund schemes
Costs related to investor communications
Costs of fund transfer from location to location
Cost towards investor education, awareness and financial inclusion
Brokerage & transaction cost pertaining execution of trade
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% p.a. of daily Net
Expense Head Assets* (Estimated
p.a.)
Cost of statutory advertisements
Other Expenses (to be specified as per Reg 66 of SEBI MF Regulations)
Maximum Base expenses ratio (BER) permissible under
Regulation 66
Statutory levies (including GST) on all expenses excluding brokerage
and transaction cost
Statutory levies (including GST) on brokerage and transaction cost
*Impact of TER on returns of both Direct plan and Regular plan through an illustration may be
provided.
Disclosure of additional incentives for gross new inflows from specified cities and specified type of
investors.
Any other information/disclosure to be added as per applicable Consolidated checklist of standard
observations.
D. LOAD STRUCTURE
Exit Load is an amount which is paid by the investor to redeem the units from the Investment Strategy.
Load amounts are variable and are subject to change from time to time. For the current applicable
structure, please refer to the website of ……..SIF (www.-----) or may call at (toll free no.) or your
distributor.
Type of Load Load chargeable (as %age of NAV)
Exit To be prescribed by respective AMC
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Section II
I. Introduction
A. Definitions/interpretation
Functional website link that contains detailed description
B. Risk factors
- Investment Strategy specific risk factors
Include risk factors associated with investment in various instruments in which the investment strategy
intends to invest as indicated in asset allocation section.
C. Risk mitigation strategies
II. Information about the investment strategy:
A. Where will the investment strategy invest – In terms of Regulation 51 of SEBI MF Regulations,
detailed description of the instruments as permitted under Regulation 39 for mutual fund schemes
(including overview of debt markets in India, if applicable) mentioned in Section I
B. What are the investment restrictions?
All the investment restrictions as contained Regulation 52 and Sixth Schedule to SEBI (Mutual Funds)
Regulations, 2026 and circulars issued thereunder, applicable to the investment strategy shall be
incorporated.
Further in case the fund follows any internal norms vis-à-vis limiting exposure to a particular scrip or
sector, etc. apart from the aforementioned investment restrictions the same needs to be disclosed.
C. Fundamental Attributes
Following are the Fundamental Attributes of the investment strategy, in terms of Paragraph 1.9 of
SEBI Master Circular for Mutual Funds:
(i) Type of investment strategy:
o Open ended/Close ended/Interval investment strategy
o Equity Schemes/ Debt Schemes/ Hybrid Schemes/Any other type of Scheme
(ii) Investment Objective
o Main Objective - Growth/Income/Both.
o Investment pattern - The Tentative portfolio breakup of Equity/Debt/Money Market instruments,
other permitted securities and such other securities as may be permitted by the Board from time to
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time with minimum and maximum asset allocation, while retaining the option to alter the asset
allocation for a short term period on defensive considerations.
(iii) Terms of Issue
o Liquidity provisions such as listing, repurchase, redemption.
o Aggregate fees and expenses charged to the investment strategy.
o Any safety net provided.
In accordance with Regulation 22(9)(c) of the SEBI (MF) Regulations 2026 and Paragraph 1.9.2 of
SEBI Master Circular for Mutual Funds, the Trustees shall ensure that no change in the fundamental
attributes of the investment strategy or the trust or fee and expenses payable or any other change
which would modify the investment strategy thereunder and affect the interests of Unitholders is
carried out unless:
• SEBI has reviewed and provided its comments on the proposal
• A written communication (including digital modes such as email/sms etc.) about the proposed
change is sent to each Unitholder and details as specified by the Board are appropriately displayed
on the website of the AMC; and
• The Unitholders are given an option for a period of atleast 30 calendar days to exit at the
prevailing NAV without any exit load.
D. Floors and ceiling within a range of 5% of the intended allocation against each sub class of
asset, as per Paragraph 14.5.1 of Master Circular for Mutual Funds (only for close ended debt
investment strategies- if applicable)
E. Other Investment Strategy Specific Disclosures:
Listing and transfer of units
Dematerialization of units
Minimum Target amount
(This is the minimum amount
required to operate the investment
strategy and if this is not collected
during the NFO period, then all the
investors would be refunded the
amount invested without any
return.)
Redemption and subscription
frequency of the investment
strategy
Notice period of the investment
strategy
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Maximum Amount to be raised (if
any)
Dividend Policy (IDCW)
Allotment (Detailed procedure) Mention, the procedure for allotment and dispatch of
account statements/unit certificates. Indicate the time
period. Mention the number of days within which the
statement shall be dispatched to the unitholders who
subscribe to the units when the investment strategy is
open for continuous subscription after NFO as per the
applicable guidelines.
Refund If application is rejected, full amount will be refunded within
5 working days of closure of NFO. If refunded later than 5
working days @ 15% p.a. for delay period will be paid and
charged to the AMC.
Who can invest
This is an indicative list and
investors shall consult their financial
advisor to ascertain whether the
investment strategy is suitable to
their risk profile.
Who cannot invest
How to Apply (details) Details regarding-
availability of application form from either the Investor
Service Centers (ISCs)/Official Points of Acceptance
(OPAs) of AMC or may be downloaded from the website
of AMC (Provide website link) shall be specified. Please
refer to the SAI and Application form for the instructions.
A link for the list of official points of acceptance, collecting
banker details etc.
Name, address and contact no. of Registrar and Transfer
Agent (R&T), email id of R&T, website address of R&T,
official points of acceptance, collecting banker details etc.
on back cover page.
To inform investors that it is mandatory to mention their
bank account numbers in their applications/requests for
redemption.
The policy regarding reissue of
repurchased units, including the
maximum extent, the manner of
reissue, the entity (the investment
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strategy or the AMC) involved in the
same.
Restrictions, if any, on the right to
freely retain or dispose of units
being offered.
Cut off timing for subscriptions/
redemptions/ switches
This is the time before which your
application (complete in all
respects) should reach the official
points of acceptance.
Where can the applications for Please refer the AMC website/ SIF website (Provide
purchase/redemption switches be website link) at the following link for the list of official points
submitted? of acceptance, collecting banker details etc.
To inform investors that it is mandatory to mention their
bank account numbers in their applications/requests for
redemption.
Minimum amount for
purchase/redemption/switches
Minimum threshold requirement
and consequences of non-
maintenance
Accounts Statements The AMC shall send an allotment confirmation specifying
the units allotted by way of email and/or SMS within 5
working days of receipt of valid application/transaction to
the Unit holders registered e-mail address and/ or mobile
number (whether units are held in demat mode or in
account statement form).
A Consolidated Account Statement (CAS) detailing all the
transactions across all SIFs (including transaction charges
paid to the distributor) and holding at the end of the month
shall be sent to the Unit holders in whose folio(s)
transaction(s) have taken place during the month by mail
or email on or before 15th of the succeeding month.
Half-yearly CAS shall be issued at the end of every six
months (i.e. September/ March) on or before 21st day of
succeeding month, to all investors providing the
prescribed details across all investment strategies of SIFs
and securities held in dematerialized form across demat
accounts, if applicable
For further details, refer SAI.
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Dividend/ IDCW The payment of dividend/IDCW to the unitholders shall be
made within seven working days from the record date.
Redemption The redemption or repurchase proceeds shall be
dispatched to the unitholders within three working days
from the date of redemption or repurchase.
For list of exceptional circumstances refer Paragraph
15.3.3 of Master Circular for Mutual Funds.
For investment strategies investing atleast 80% of total
assets in permissible overseas investments (as per
Paragraph 13.11 of SEBI Master Circular for Mutual
Funds), the transfer of redemption or repurchase
proceeds to the unitholders shall be made within five
working days from the date of redemption or repurchase.
Bank Mandate
Delay in payment of redemption / The Asset Management Company shall be liable to pay
repurchase proceeds/dividend interest to the unitholders at rate as specified vide
Paragraph 15.4 of Master Circular for Mutual Funds for the
period of such delay.
Unclaimed Redemption and Income
Distribution cum Capital Withdrawal
Amount
Disclosure w.r.t investment by
minors
Any other disclosure in terms of
Consolidated Checklist on Standard
Observations
III. Other Details
A. Periodic Disclosures such as monthly disclosures, half yearly results, annual report
 Specify timelines of these disclosures and details of where they are disclosed. (such as “Refer
to AMC website, SIF website, SAI, AMFI website for further details etc. Provide a functional
link for each respective field”)
 Portfolio disclosures
 Any disclosure in terms of Consolidated Checklist on Standard Observations
B. Scenario Analysis for Derivatives Positions (As specified by AMFI)
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C. Liquidity risk management tools and its applicability
D. Transparency/NAV Disclosure (Details with reference to information given in Section I)
E. Transaction charges and stamp duty- Indicate only the amount of transaction charges and stamp
duty applicable. Details to be provided in SAI.
F. Associate Transactions- Please refer to Statement of Additional Information (SAI)
G. Taxation- For details on taxation please refer to the clause on Taxation in the SAI apart from the
following:
Resident Investors Non Resident Mutual Fund/SIF
Investors
Tax on Dividend
Capital gain
Long Term:
Short Term:
H. Rights of Unitholders- Please refer to SAI for details.
I. List of official points of acceptance: Details to be uploaded and updated on a functional website
link to the website of SIF
J. Penalties, Pending Litigation or Proceedings, Findings of Inspections or Investigations For
Which Action May Have Been Taken Or Is In The Process Of Being Taken By Any Regulatory
Authority
- AMCs to ensure real time updation of data on the said link.
- Any disclosure in terms of Consolidated Checklist on Standard Observations
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E. MF LITE SCHEME INFORMATION DOCUMENT
Applicable for Passively Managed schemes of Mutual Funds under MF Lite Framework
Name of Mutual Fund:
Name of Asset Management Company:
Address of AMC:
Website of AMC:
Name of Trustee Company:
Address of Trustee Company:
Name of the Scheme:
Category of Scheme:
*Equity/ Debt/ Hybrid ETF/Gold or Silver ETF/FoFs (single domestic or overseas index). *In case of
Hybrid funds, indicate the sub category (Balanced/Equity oriented/debt oriented)
Scheme Code: (To be disclosed after obtaining the same):
NFO open date:
NFO close date:
Offer for Units of Rs. -- each for cash during the New Fund Offer and Continuous offer for Units at
NAV based prices
Investment objective Scheme Riskometer Benchmark Riskometer (as
applicable)
Xxxxxxxxx AMC xxxxx index
scheme:
Passive investment in equity
and equity related
securities replicating the
composition of the
…………. Index, subject to
tracking errors
(given for illustration purpose)
“There is no assurance that the
investment
objective of the Scheme will be
achieved”
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Investors are advised to refer to the Statement of Additional Information (SAI) for details of the
________
Mutual Fund, Standard Risk Factors, Special Considerations, Tax and Legal issues and other
general information on www.__________.
The particulars of the Scheme have been prepared in accordance with the Securities and Exchange
Board of India (Mutual Funds) Regulations 2026, (herein after referred to as SEBI MF Regulations)
as amended till date and circulars issued thereunder filed with SEBI. The units being offered for public
subscription have not been approved or recommended by SEBI nor has SEBI certified the accuracy
or adequacy of the Scheme Information Document.
The Scheme Information Document sets forth concisely the information about the scheme that a
prospective investor ought to know before investing. Before investing, investors should also ascertain
about any further changes to this Scheme Information Document after the date of this Document from
the Mutual Fund / Investor Service Centres / Website / Distributors or Brokers.
SAI is incorporated by reference (is legally a part of the Scheme Information Document). For
a free copy of the current SAI, please contact your nearest Investor Service Centre or log on
to our website.
The Scheme Information Document should be read in conjunction with the SAI and not in
isolation.
This Scheme Information Document is dated ________.
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HIGHLIGHTS/SUMMARY OF THE SCHEME
Sr Title Description
No.
I. Benchmark (TRI)
II. Plans and Options Plan- Direct Plan/Regular Plan
Options under each Plan(s)
Plans/Options and sub Growth
options under the
 Income Distribution cum Capital Withdrawal (IDCW) (include
Scheme
facilities
if applicable)
 Including Default option/ facility (as applicable)
III. Load Structure
IV. Minimum application  During NFO:
amount/Switch in  On continuous basis:
V. Minimum Additional  On continuous basis:
Purchase Amount)
VI. Minimum  On continuous basis:
redemption/Switch Out
amount
VII. Tracking Error Regular Plan Direct Plan
VIII. Tracking Difference Regular Plan Direct Plan
IX. Computation of NAV Mention the formula for computation of NAV (Detailed disclosure on weblink)
X. Asset Allocation This scheme tracks …. Index.
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95% allocation is to the constituents of index and 5% to …….. ( as
applicable)
List of underlying securities for passive schemes to invest:
1. Equity
2. Plain vanilla debt securities
3. Physical commodities and exchange traded commodity derivatives
4. Equity derivatives
5. GSEC, Tbills and other money market instruments
6. Any other instrument (as applicable)
For details AMC may refer Annexure 1 (As applicable)
XI. Fund manager details Name:
Managing since:
Total Experience (in years) :
XII. Annual Scheme (Mention only the actual TER% applicable)
Recurring Expenses
For detailed disclosure, kindly refer SAI
XIII. Transaction charges and Indicate only the amount of transaction charges and stamp duty
stamp duty applicable
XIV. Information available (Following information may be provided through weblink. Mention weblink/
through weblink weblinks in this box for each item
 Liquidity/listing details
 NAV disclosure
 Applicable timelines for dispatch of redemption proceeds etc
 Breakup of Annual Scheme Recurring expenses
 Definitions
 Applicable risk factors
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 Detailed disclosures regarding the index, index eligibility criteria,
methodology, index service provider, index constituents, impact
cost of the constituents/ underlying fund in case of fund of funds
 List of official points of acceptance
 Penalties, Pending Litigation or Proceedings, Findings of
Inspections or Investigations
 Investor services
 Portfolio Disclosure
 Detailed comparative table of the existing schemes of AMC
 Scheme performance
 Periodic Disclosures
 Any disclosure in terms of Consolidated Checklist on Standard
Observations
 Scheme specific disclosures (as per the prescribed format)
 Scheme Factsheet
Instruction to AMC : For details on disclosures to be provided under each
of the above bullet points, refer to Annexure 2 titled ‘Sections moved to
Weblink’)
XV. How to Apply Summary of process only like availability of application form from either the
Investor Service Centers (ISCs)/Official Points of Acceptance (OPAs) of
AMC or may be downloaded from the website of AMC.
For detailed disclosure, kindly refer SAI
XVI. Where can applications Summary of process only like the list of official points of acceptance,
for collecting banker details etc.
subscription/redemption/
switches be submitted
Inform investors that it is mandatory to mention their bank account
numbers in their applications/requests for redemption
For detailed disclosure, kindly refer SAI
XVII. Specific attribute of the
scheme (such as lock in/
duration in case of target
Maturity scheme/close
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ended schemes etc.) (as
applicable)
XVIII. Special product/facility Briefly describe the facilities/products Available
available during the NFO
Facilities like:
and on ongoing basis
 Systematic Investment Plan
 Systematic Transfer Plan
 Systematic Withdrawal Plan
 For further details of above special products / facilities,
For detailed disclosure, kindly refer SAI
Optional
Segregated portfolio/side Optional. Confirmation/disclosure statement only.
pocketing disclosure
For Details, kindly refer SAI
Stock lending/short selling Confirmation/disclosure statement only.
For Details, kindly refer SAI
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Annexure 1 to Format No. 5.E
AMC to choose the applicable provisions based on intended asset allocation
Equity derivatives of underlying securities forming part  Calculation of cumulative gross exposure
of the index may also be available as an investment  Numerical example of risk involved
option in case the underlying security is not available for  Disclosure relating to extent and manner of
purchase. participation in derivatives to be provided
ETCDs (applicable to ETFs only)  Risk factors w.r.t ETCDs
 Calculation of cumulative gross exposure
 Investment limits
 Disclosure relating to extent and manner of
participation in derivatives to be provided
Hybrid schemes As applicable
Close ended debt schemes As applicable
Gold or Silver ETF/FoFs (single domestic As applicable
/overseas index)
Annexure 2 to Format No. 5.E
Liquidity / Listing Details Provide Liquidity provisions on ongoing basis. Listing
details only to be provided if the scheme intends to list
immediately after NFO.
NAV Disclosure  Disclosure timings
Disclosure pertaining to illustration on computation of NAV
and Methodology for calculation of sale and re-purchase
price of the units of mutual fund scheme.
Applicable Timelines Timeline for
 Dispatch of redemption proceeds,
Dispatch of IDCW (if applicable) etc.
Breakup of Annual Scheme Recurring expenses  Head wise breakup including impact of TER on
returns of both directs and regular plan through
illustration may be provided.
TER for last 6 months as well as scheme factsheet shall
be made available
Definition Functional website link that contains detailed description
Risk Factors  Scheme specific risk factors
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Risk mitigation strategies
Index methodology / Details of underlying fund in case Disclosures regarding the index, index eligibility criteria,
of Fund of Funds methodology, index service provider, index constituents,
impact cost of the constituents.
In case of Fund of Funds Scheme, Details of Benchmark,
Investment Objective, Investment Strategy, TER, AUM,
Year wise performance, Top 10 Holding/ link to Top 10
holding of the underlying fund should be provided.
List of official points of acceptance Details to be uploaded and updated on a functional
website link
Penalties, Pending Litigation or Proceedings, Findings AMCs to ensure real time updation of data on the said
of Inspections or Investigations For Which Action May link.
Have Been Taken Or Is In The Process Of Being
Taken By Any Regulatory Authority
Investor Services Details of related information/procedure/investor points
 Contact details for general service requests
Contact details for complaint resolution
Portfolio Disclosure  As per specified timelines i.e. Fortnightly /
Monthly/ Half Yearly
Portfolio turnover rate (times) and policy
Detailed comparative table of the existing schemes of (As applicable)
AMC
Scheme performance (As applicable)
Periodic Disclosures such as Half yearly disclosures,
half yearly results, annual report
Scheme factsheet
Scheme specific disclosures Refer the format given below
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Format for Scheme Specific Disclosures (on weblink):
Portfolio rebalancing Timeline to be provided.
For detailed disclosure, kindly refer SAI
Disclosure w.r.t investments by key Amount of investment to be provided
personnel and AMC directors
including regulatory provisions For detailed disclosure, kindly refer SAI
Investments of AMC in the Amount of investment to be provided
Scheme
For detailed disclosure, kindly refer SAI
Taxation For details on taxation please refer to the clause on Taxation in the SAI
Associate Transactions For detailed disclosure, kindly refer SAI
Listing and transfer of units
Dematerialization of units
Minimum Target amount (This is
the minimum amount required to
operate the scheme and if this is
not collected during the NFO
period, then all the investors
would be refunded the amount
invested without any return).
Maximum Amount to be raised (if
any)
Dividend Policy (IDCW)
Allotment (Detailed procedure) Mention, the procedure for allotment and dispatch of account statements/unit
certificates. Indicate the time period. Mention the number of days within
which the statement shall be dispatched to the unitholders who subscribe to
the units when the scheme is open for continuous subscription after NFO as
per the applicable guidelines.
Refund If application is rejected, full amount will be refunded in
terms of applicable provision of Master circular for Mutual Funds.
Who can invest This is an indicative
list and investors shall consult your
financial advisor to ascertain whether
the scheme is suitable to you risk
profile.
Who cannot invest
The policy regarding reissue of
repurchased units, including the
maximum extent, the manner of
reissue, the entity (the scheme or the
AMC) involved in the same
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Restrictions, if any, on the right to
freely retain or dispose of units
being offered.
Cut off timing for subscriptions/
redemptions/switches
This is the time before which your
application (complete in all respects)
should reach the official points of
acceptance.
Minimum balance to be maintained
and consequences of non-
maintenance.
Accounts Statements Timeline and other details to be mentioned in terms of
applicable provision of Master circular for Mutual Funds.
For further details, refer SAI.
Dividend/ IDCW The payment of dividend/IDCW to the unitholders shall be made within
seven working days from the record date.
Redemption Timeline and other details to be mentioned in terms of
applicable provision of Master circular for Mutual Funds.
For further details, refer SAI.
Bank Mandate
Delay in payment of redemption / Timeline and other details to be mentioned in terms of
repurchase proceeds/dividend applicable provision of Master circular for Mutual Funds.
For further details, refer SAI.
Unclaimed Redemption and Income Details to be mentioned in terms of applicable provision of Master
Distribution cum Capital Withdrawal circular for Mutual Funds.
Amount
For further details, refer SAI.
Disclosure w.r.t investment by Details to be mentioned in terms of applicable provision of
minors Master circular for Mutual Funds.
For further details, refer SAI.
Principles of Incentive structure for
market makers
The respective addendums to the
MF Lite Scheme’s SID after the last
update of SID.
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F. KEY INFORMATION MEMORANDUM (KIM) OF SIF528
NAME OF THE INVESTMENT STRATEGY
(Type of Investment strategy)
1. Name and type of the Investment strategy to be aligned with SEBI Circular on Regulatory
framework for Specialised Investment Funds (SIF).
2. In accordance with SEBI Circulars on Potential Risk Class (PRC) Matrix for debt schemes,
the PRC matrix along with the mark for the cell in which the scheme resides shall be disclosed
on front page of SID.
3. Product Labelling and Risk- band of the Investment Strategy and Benchmark should be
disclosed
4. In case the investment strategy is listed/proposed to be listed (close ended / interval
investment strategies etc.), the Scrip Code issued by the stock exchange after listing to be
mentioned below the name of the investment strategy.
This product is Risk-band Benchmark Risk-band (as applicable)
suitable for
investors who are
seeking*
Risk band Level 1 (Lowest Risk band Level 1 (Lowest risk)
risk)
..
..
..
..
..
..
Risk band Level 5 (Highest risk)
Risk band Level 5 (Highest
risk)
SIF shall disclose the product labeling of the Investment Strategy depending upon the level
of risk in the Investment Strategy
Offer for Units of Rs. -- Per Unit for cash during the
New fund Offer Period and at NAV based prices upon re-opening
528 SEBI Letter No. SEBI/HO/IMD/IMD-RAC-2/OW/20457/1 dated July 30, 2025
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New Fund Offer Opens on:
New Fund Offer Closes on:
Investment Strategy Re-opens for continuous
sale and repurchase on:
Name of SIF :
Name of the mutual fund :
Name of Asset Management Company :
Name of Trustee Company :
Addresses, Website of the entities (including SIF)
This Key Information Memorandum (KIM) sets forth the information, which a prospective investor
ought to know before investing. For further details of the Investment Strategy /SIF, due diligence
certificate by the AMC, Key Personnel, investors’ rights & services, risk factors, penalties & pending
litigations etc. investors should, before investment, refer to the Investment Strategy Information
Document and Statement of Additional Information available free of cost at any of the Investor Service
Centres or distributors or from the website www. -----.
The Investment Strategy particulars have been prepared in accordance with Securities and Exchange
Board of India (Mutual Funds) Regulations 2026, as amended till date, and filed with Securities and
Exchange Board of India (SEBI). The units being offered for public subscription have not been
approved or disapproved by SEBI, nor has SEBI certified the accuracy or adequacy of this KIM.
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Investment Objective
Asset Allocation This includes asset allocation table giving the broad classification of
Pattern of the assets and indicative exposure level in percentage terms. The asset
Investment Strategy allocation should be consistent with the investment objective of the
Investment Strategy and SEBI circular on Regulatory framework for
Specialised Investment Funds (SIF).
Indicative allocations
Instruments (% of total assets)
Minimum Maximum
 Percentage of investment in overseas securities, derivatives for
non-hedging purposes, stock lending, securitized debt, Debt
instruments with special features (AT 1 and AT 2 Bonds), Debt
Instruments with SO / CE, ReITs and InVITs, Tri-party repos,
other mutual funds, repo/ reverse repo transactions in corporate
debt securities, Credit Default Swaps, covered call option etc).
to be indicated.
 In case the Investment Strategy does not intend to invest in
these securities, negative confirmation in a table format should
be provided for securities / instruments in which the Investment
Strategy will not invest.
 Cumulative gross exposure limits to be adhered in terms of
SEBI Circular on Regulatory framework for Specialised
Investment Funds (SIF)
 Any other information/disclosure to be added as per applicable
Consolidated checklist of standard observations.
Indicative Table (Actual instrument/percentages may vary
subject to applicable SEBI circulars)
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Sl. Type of Percentage Circular
no Instrument of exposure references*
1. Securities
Lending
2. Derivatives for
non-hedging and
other than for
portfolio
rebalancing
purposes
3. Securitized Debt
4. Overseas
Securities
5. InVITS
6. Debt instruments
with special
features (AT1
and AT2 Bonds)
7. Debt Instruments
with SO / CE
8. Tri-party repos
9. Repo/ reverse
repo transactions
in corporate debt
securities
10. Credit Default
Swap
transactions
11. Any other
instrument
*SEBI circular references (wherever applicable) in support of exposure
limits of different types of asset classes in asset allocation shall be
provided.
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Timelines for deployment of funds collected by Asset Management
Companies (AMCs) in New Fund Offer (NFO) as per asset allocation of
the scheme as per SEBI circular dated February 27, 2025
Portfolio rebalancing: AMC to refer to Clause 1.14.1.2, Clause 2.9,
Clause 3.5.3.11 and Clause 3.6.7 of SEBI Master Circular for Mutual
Funds and applicable clause of Consolidated checklist of standard
observations for active and passive breach/es.
Investment Approach
Risk Profile of the SIF Units involve investment risks including the possible loss of
Investment Strategy principal. Please read the ISID carefully for details on risk factors
before investment. Investment Strategy specific Risk Factors are
summarized below
Plans and Options
Applicable NAV (after
the Investment
Strategy opens for
Redemption/repurchas
e and sale)
Subscription
frequency
Redemption frequency
Minimum Investment
Threshold
Minimum Application Purchase Additional Purchase Redemption/Repurchase
Amount/ Number of
Rs. _______
Units
The redemption will be
subject to provisions
mentioned under “Minimum
Investment Threshold”
Notice period
(Maximum duration of
notice period shall not
exceed 15 working
days.)
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Despatch of Within 3 working days of the receipt of the redemption request at the
Repurchase authorised centre of the ------- Fund.
(Redemption) Request
Benchmark Index
Dividend /IDCW Policy
Name of the Fund
Manager
Name of the Trustee
Company
Expenses of the New Fund Offer Period
Scheme
Continuous Offer
Load Structure
Exit Load
Recurring expenses
Give slab wise break up depending on the assets under management.
Give plan/option wise break up if the expense structures are different.
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For the actual current expenses being charged, the investor should refer
to the website of the SIF.
Actual expenses for the previous financial year: ---- (Not Applicable in
case of a new scheme)
The maximum limit of recurring expenses that can be charged to the
Investment Strategy would be as per Regulation 66 of the SEBI (MF)
Regulation, 2026. Investors are requested to read “Section- Annual
Scheme Recurring Expenses” in the ISID.
Additional Scheme 1. Scheme’s portfolio holdings (top 10 holdings by issuer and fund
related disclosures allocation towards various sectors to be provided through a
functional website link that contains detailed description.)
2. Disclosure of name and exposure to Top 7 issuers, stocks,
groups and sectors as a percentage of NAV of the scheme in
case of debt and equity ETFs/index funds through a functional
website link that contains detailed description
3. Portfolio Turnover Rate particularly for equity oriented schemes
shall also be disclosed.
Daily Net Asset Value Mention only the Daily Disclosure timings on AMFI and AMC website.
(NAV) Publication
Tax treatment for the Investor will be advised to refer to the details in the Statement of
Investors Additional Information and also independently refer to his tax advisor.
(Unitholders)
For Investor Name and Address of Name, address, telephone number, fax
Grievances please Registrar number, e-mail i.d. ------
contact
Unitholders’ Give the frequency and the policy of the fund house for the providing the
Information Accounts Statement, Annual Financial results and Half yearly portfolio to
the investors.
Date:
N.B. Data and information shall be up-to-date but in no case older than 30 days from the date
of KIM
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G. STATEMENT OF ADDITIONAL INFORMATION (SAI) FOR SIF 529
This Statement of Additional Information (SAI) contains details of XXX ‘Specialized Investment Fund’
(‘SIF’) offered by ABC Mutual Fund (the “Mutual Fund”), its constitution, and certain tax, legal and
general information. It is incorporated by reference and is legally a part of the Investment Strategy
Information Document (ISID).
This SAI is dated ________.
I. INFORMATION ABOUT SPONSOR, AMC AND TRUSTEE COMPANIES
A. Constitution of the Mutual Fund
ABC Mutual Fund has been constituted as a trust on _______ in accordance with the provisions of
the Indian Trusts Act, 1882 (2 of 1882) with XYZ, as the Sponsor and DEF as the Trustee. The Trust
Deed has been registered under the Indian Registration Act, 1908. The Mutual Fund was registered
with SEBI on ……………..under Registration Code MF-
B. Constitution of the Specialized Investment Fund
XXX ‘Specialized Investment Fund (‘SIF’) is offered by ABC Mutual Fund in terms of Regulation 48(1)
of SEBI (Mutual Funds) Regulations, 2026 (“SEBI Regulations”) with DEF as the Trustee and STP
as the Asset Management Company (AMC). ABC Mutual Fund was granted approval to establish the
SIF by SEBI on……..
C. Sponsor
ABC Mutual Fund is sponsored by XYZ. The Sponsor is the Settler of the Mutual Fund Trust.
Financial Performance of the Sponsor (past three years):
Particulars Year 1 Year 2 Year 3
Net Worth
Total Income
Profit after tax
529 SEBI Letter No. SEBI/HO/IMD/IMD-RAC-2/OW/20457/1 dated July 30, 2025
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Assets Under
Management (if
applicable)
D. The Trustee
DEF (the “Trustee”), through its Board of Directors, shall discharge its obligations as trustee of the
XXX SIF. The Trustee ensures that the transactions entered into by the AMC are in accordance with
the SEBI Regulations, as amended from time to time and will also review the activities carried on by
the AMC.
As regards to the SIF, the Trustee ensures that all the activities of the SIF are in accordance with the
provisions of the SEBI Regulations and Circulars issued in this regard from time to time.
1. Details of Trustee Directors:
Name Age/Educational Brief Experience
Qualification
PQR 45/CA PQR is a fellow member of the Institute of Chartered
Accountant and is in practice from 1978. He is a
Senior Partner with a firm of Chartered Accountants
in India. He is also a director on the Board of various
companies and trustee of charitable institutions
State the responsibilities and duties of the Trustee as well as the specific and general due diligence.
II. Asset Management Company
STP is a public/private company incorporated under the Companies Act, 1956/ 2013 on ________,
having its Registered Office at _____________________. STP has been appointed as the Asset
Management Company of the XXX SIF by the Trustee vide Investment Management Agreement
(IMA) dated ___________, and executed between DEF and STP. STP is also the AMC of ABC Mutual
Fund.
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Details of AMC Directors:
Name Age/Educational Brief Experience
Qualification
UVT 45/CA UVT is a fellow member of the Institute of Chartered
Accountant and is in practice from 1978. He is a
Senior Partner with a firm of Chartered Accountants
in India. He is also a director on the Board of various
companies and trustee of charitable institutions
State the Duties and obligation of the AMC as specified in the SEBI Mutual Fund Regulations on
www.sebi.gov.in.
Information on Key Personnel:
Name/Designation Age/Educational Total No. of Nature of past experience
Qualification years of including assignments held
Experience during the last 10 years
III. Service providers
1. Custodian
Name, Address and SEBI Registration Number of the Custodian.
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2. Registrar and Transfer agent
Name and principal business address of the Registrars, Transfer Agents and the dividend paying
agent. A statement to the effect that the Board of the Trustees and the AMC have ensured that the
Registrar has adequate capacity to discharge responsibilities with regard to processing of applications
and dispatching unit certificates to unitholders within the time limit prescribed in the Regulations and
also has sufficient capacity to handle investor complaints. Also state the SEBI Registration Number
of Registrars, Transfer Agents.
3. Statutory auditor
Name and Address of the statutory auditor for SIF.
4. Legal counsel
Name and Address of the Legal Counsel
5. Fund Accountant
Name and Address of the fund accountant
6. Collecting Bankers
Name, Address and SEBI Registration Number
IV. Condensed financial information (CFI) for all the investment strategies launched by SIF
during the last three fiscal years (excluding redeemed investment strategies) in the format
given below
HISTORICAL Name of the Investment Strategy
PER UNIT
STATISTICS
YR. 1 YR. 2 YR. 3
NAV (Net
Asset Value)
at the
beginning of
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the year (as on
April 1)
IDCW*
NAV at the end
of the year (as
on March 31)
Annualised
return**
Net Assets at
the end of
period (Rs.
Crs.)
Ratio of
Recurring
Expenses to
net assets
* Excluding IDCW details of investment strategy.
** Only for growth option. Explanation to be given for not providing annualised return for options
other than growth option. Absolute returns to be provided for Investment strategies less than one
year.
V. RISK FACTORS
1. Standard Risk Factors
a. Standard Risk Factors for investments in SIF
b. Risks associated with different derivative strategies including derivative strategies as
applicable for the SIF.
c. Other risk factors (viz. Swing pricing, investment in CDMDF, LRM etc.)
2. Special Considerations
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VI. HOW TO APPLY?
Describe briefly the manner in which the units of the Investment strategy being offered under the
Investment Strategy Information Document may be purchased by the prospective investor. The
descriptions should emphasise the procedures to be followed. Also provide the details of KYC
requirement for unit holders.
A. Special Products / Facilities offered by the Investment Strategies.
B. Default scenarios available to the investors under Growth/dividend plans of the Investment
Strategies.
VII. RIGHTS OF UNITHOLDERS OF THE INVESTMENT STRATEGY
1. Unit holders have a proportionate right in the beneficial ownership of the assets of the
Investment Strategy.
When the SIF declares an Income Distribution cum Capital Withdrawal (IDCW) under an Investment
Strategy, IDCW payments shall be completed to the Unit Holders within 7 working days from the
record date of IDCW.
Consolidated Account Statement (‘CAS’) at SIF level for each calendar month will be issued on or
before 15th day of succeeding month to all unit holders having financial transactions and who have
provided valid Permanent Account Number (PAN). For folios not included in the CAS, the AMC shall
issue a monthly account statement to the unit holders, pursuant to any financial transaction done in
such folios; the monthly statement will be send on or before 15th day of succeeding month. In case
of a specific request received from the unit holders, the AMC shall provide the account statement to
the unit holder within 5 business days from the receipt of such request. If a Unit holder so desires the
SIF shall issue a Unit certificate (non- transferable) within 5 Business Days of the receipt of request
for the certificate.
2. The SIF shall dispatch redemption or repurchase proceeds within 3 working days of accepting
the valid redemption or repurchase request. Provided that, processing of redemption(s) in the
SIF Investment Strategies shall be subject to appropriate notice period(s), if any, as may be
implemented by the AMC, based on structure of the Investment Strategy and the liquidity risk
associated with it.
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3. The Trustee is bound to make such disclosures to the Unit holders as are essential in order to
keep the unitholders informed about any information known to the Trustee which may have a
material adverse bearing on their investments.
4. The appointment of the AMC for the SIF can be terminated by majority of the Directors of the
Trustee Board or by 75% of the Unit holders of the investment strategy.
5. 75% of the Unit holders can pass a resolution to wind- up an Investment strategy.
6. The Trustee shall obtain the consent of the Unit holders:
- whenever required to do so by SEBI, in the interest of the Unit holders.
- whenever required to do so if a requisition is made by three- fourths of the Unit holders
of the Investment strategy.
- when the majority of the trustees decide to wind up a scheme in terms of Regulation
36(2)(a) of SEBI (Mutual Funds) Regulations, 2026 or prematurely redeem the units of
a close ended scheme.
- when the majority of the trustees decide to wind up the Investment Strategy or
prematurely redeem the units of an Investment Strategy.
7. The trustees shall ensure that no change in the fundamental attributes of any Investment
strategy, the fees and expenses payable or any other change which would modify the
Investment strategy and affect the interest of the unit holders is carried out by the asset
management company, unless it complies with Regulation 22(9)(c) of SEBI (Mutual Funds)
Regulations, 2026.
8. The Trustee shall ensure that no change in the fundamental attributes of any Investment
strategy or the trust or fees and expenses payable or any other change which would modify
the Investment strategy and affects the interest of Unit holders of the Investment Strategy,
shall be carried out by the AMC, unless the AMC ensures compliance with requirements listed
hereunder:
(i) SEBI has reviewed and provided its comments on the proposal;
(ii) a written communication about the proposed change is sent to each Unit holder and an
advertisement is given in one English daily newspaper having nationwide circulation as well as in a
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newspaper published in the language of the region where the Head Office of the ABC Mutual Fund is
situated; and
(iii) the Unit holders are given an option to exit at the prevailing Net Asset Value without any Exit Load.
9. In specific circumstances, where the approval of unitholders is sought on any matter, the same
shall be obtained by way of a postal ballot or such other means as may be approved by SEBI.
VIII. INVESTMENT VALUATION NORMS FOR SECURITIES AND OTHER ASSETS
This section shall disclose the Valuation of Assets and properties of the Investment strategy in
accordance with Seventh Schedule and Regulation 22(9)(b)(i) of SEBI (Mutual Funds) Regulations,
2026 and applicable guidelines.
IX. COMPUTATION OF NAV
A. Policy of computation of NAV
B. Policy for computation of NAV in foreign securities
C. Procedure in case of delay in disclosure of NAV
X. TAX & LEGAL & GENERAL INFORMATION
A. Taxation on investing in SIF
This section shall disclose the applicable tax provisions for investments in SIF Investment strategy.
B. Legal Information
This section may include information on Nomination Facility, KYC Requirements, Requirements of
Prevention of Money Laundering Act, Transfer and transmission of units, Duration of the Investment
Strategy /Winding up, Procedure and manner of winding up etc.
C. General Information
1. Inter- Investment Strategy transfer of investments:
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Transfers of investments from one Investment Strategy to another Investment Strategy in the same
SIF shall be allowed only if -
(a) such transfers are done at the prevailing market price for quoted instruments on spot basis.
Explanation: “spot basis” shall have same meaning as specified by stock exchange for spot
transactions.
(b) the securities so transferred shall be in conformity with the investment objective of the Investment
Strategy to which such transfer has been made.
2. Aggregate investment in the Investment Strategy under the following categories:
In accordance with Paragraph 6.8 on ‘Scheme Related Disclosures’ of SEBI Master Circular for
Mutual Funds please find below the aggregate investment in the respective Investment Strategy by
Board of Directors of ________ (AMC) and key personnel as on May 31 _____:
Name of Aggregate amount invested in the Investment Strategy as on May
Investment 31, _____(market value in Rs.)
Strategy
AMC’s Board of Key personnel Fund Manager
Directors (excluding Fund
Manager)
3. Dematerialisation and Rematerialisation procedures
4. ASBA disclosures
5. Portfolio Turnover Details
D. Associate Transactions
The following disclosures, summarising historical information pertaining to the last three fiscal years
of the Investment strategy of the SIF under the management of the Asset Management Company
reflecting associate transactions and the manner in which such transactions affected the performance
of Investment strategies of SIF, should be made. The disclosures shall include any underwriting
obligations undertaken by the Investment strategies of SIF with respect to issues of associate
companies, devolvement if any, of such commitments, subscription by the Investment strategies in
issues lead managed by associate companies, total business given to associate brokers and the
percentage of brokerage commission paid to them and any distribution of units performed by
associate companies.
This section shall also disclose:
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(a) the policy for investing in group companies of the sponsor of a Mutual Fund that is followed/to be
followed by the SIF, including the aggregate market value of investments in group companies of the
Sponsor and asset Management Company by all the Investment strategies of SIF and its percentage
of the aggregate net asset value of the SIF,
(b) in case any Investment strategies of SIF has invested more than 25% of its net assets in group
companies, this shall be disclosed.
(c) names of associates of the Sponsor or the Asset Management Company with which the SIF
proposes to have dealings, transactions and those whose services may be used for marketing and
distributing the Investment strategy and the commissions that may be paid to them.
E. Documents Available for Inspection
The following documents will be available for inspection at the office of ABC Mutual Fund at
________________________________ during business hours on any day (excluding Saturdays,
Sundays and public holidays):
 Memorandum and Articles of Association of the AMC
 Investment Management Agreement
 Trust Deed and amendments thereto, if any
 Mutual Fund Registration Certificate
 No objection from SEBI to establish SIF
 Agreement between the Mutual Fund and the Custodian
 Agreement with Registrar and Share Transfer Agents
 Consent of Auditors to act in the said capacity
 Consent of Legal Advisors to act in the said capacity
 Securities and Exchange Board of India (Mutual Funds) Regulations, 2026 and amendments
from time to time thereto.
 Indian Trusts Act, 1882.
F. Investor Grievances Redressal Mechanism
Describe briefly the investors' complaints history for the last three fiscal years of existing investment
strategies and the redressal mechanism thereof. The SAI should include data updated every six
months on the number of complaints received, redressed and pending with the SIF.
G. Information pertaining to Investments by the Investment Strategies of SIF
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1. Derivative strategies
2. Swing Pricing
3. Provisions on creation of Segregated portfolio/Side pocketing
4. Short selling / stock lending
H. Transaction Charges and Stamp Duty
XI. Disclosures and Reports by The Fund
1. Account Statement/Consolidated Account Statement
2. Half Yearly Disclosures/Portfolio Disclosures/Financial Results
3. Half Yearly Results
4. Annual Report
Notwithstanding anything contained in this Statement of Additional Information, the
provisions of the SEBI (Mutual Funds) Regulations, 2026 and the guidelines thereunder shall
be applicable.
*****
Instruction:
A SIF is free to add any other disclosure, which in the opinion of the Trustees of the SIF or the Asset
Management Company (AMC) is material, provided that such information is not presented in an
incomplete, inaccurate or misleading manner. Care should be taken to ensure that inclusion of such
information does not, by virtue of its nature, or manner of presentation, obscure or impede
understanding of any information that is required to be included under the Investment Strategy
information document and Statement of Additional Information.
Note:
The wording in italics is explanatory commentary/instructions.
The words in Arial font are the text to be used in the Statement of Additional Information, as applicable.
*****
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6. STANDARD OBSERVATIONS530
A. STANDARD OBSERVATION FOR SCHEME INFORMATION DOCUMENT (SID)
While filing the Statement of Additional Information (SAI) and the Scheme Information
Document (SID) for launching a new scheme / revising and filing existing SAI and SID with
SEBI, the mutual funds should highlight and clearly mention the page number of the SAI and
SID on which each of the following observation has been incorporated. In case of any
amendment to Regulations, the new provisions should be incorporated in the SAI / SID.
Consolidated List of Standard Observations:
Compliance Check List Page
No. in
SID
Cover Page Disclosures
1. Name of the scheme and type of scheme shall be as per categorization circular.
Name of Index Funds: Name of scheme shall include complete name of underlying
Index.
Name in case of FOF’s where single fund is underlying (Feeder Funds): To include the
complete name of the underlying fund in the name of the scheme
2. Type of scheme for Debt Schemes to include Potential Risk Class (PRC) description
3. Risk-o-meter of the Scheme
4. Potential Risk Class Matrix in case of debt Schemes
Summary / Key Highlights Disclosures
5. Investment objective must be true to the scheme label and shall contain statement
“There is no assurance that the investment objective of the Scheme will be achieved”
6. Duration of the scheme shall be mentioned for close ended scheme in ‘Highlights’
section
7. Scheme Code to form a part of summary disclosures
Risk Factors
530 SEBI/IMD/CIR No. 5/126096/08 dated May 23, 2008
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8. Scheme specific risk shall include risks pertaining to only those instruments that are
applicable based on the asset allocation pattern.
All the risk factors to be disclosed at a single place in the Scheme Information
Document instead of giving at different places
9. Risk Control/ Mitigation measures shall specify risk control strategies for risks
identified based on the asset allocation pattern.
10. Tracking error and tracking difference risks to be provided in all index funds, ETFS and
FoFs as per SEBI Master Circular for Mutual Funds
11. If the scheme proposes to invest in overseas investments, required disclosures as
per SEBI Master Circular for Mutual Funds have been made at all relevant places.
The risk factors associated with such investments including currency risk and risks
arising from exhaustion of overseas limits as per applicable SEBI and RBI circulars
shall also be disclosed.
12. Liquidity Risk Management practices to be added for open ended debt schemes in
accordance with Paragraph 5.2 of SEBI Master Circular for Mutual Funds relating to
‘Stress testing by open ended Debt schemes’
Asset Allocation Disclosures
13. Securities in which investment is made for the purpose of ensuring liquidity (debt and
money market instruments) are those that fall within the definition of liquid assets
14. Cash and cash equivalent having residual maturity of less than 91 Days which are not
considered for the purpose of calculating gross exposure limit shall be specified in the
SID along with list of instruments, relevant circular reference, and reference of Letter
to AMFI dated November 03, 2021.
15. If AMC intends to invest in overseas securities, limits for investing in overseas
securities shall be specified under asset allocation section and reference shall be
made to all the relevant circulars in this regard.
Further until Overseas Investment Limits are revised by RBI/SEBI an undertaking w.r.t
restriction on investment shall be provided by AMC at the time of filing of Scheme
Documents by AMC.
16. Separate limits as applicable for Overseas ETFs and Overseas securities to be
provided for as per Paragraph 13.11 of SEBI Master circular for Mutual Funds.
17. The Paragraph related to “cumulative gross exposure shall not exceed 100%....” shall
be duly incorporated under asset allocation section in terms of Paragraph 13.18.1 of
SEBI Master Circular for Mutual Funds.
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18. AMC shall provide exhaustive list of negative confirmations to invest or provide limits
as applicable there in for the below types of asset classes in asset allocation section:
a. Derivatives
b. Securitized Debt
c. Debt Instruments with special features (AT1 and AT2 Bonds)
d. Debt Instruments with SO / CE
e. Stock lending and Borrowing
f. Overseas Investments
h. InVITs
i. Tri-party repos
j. Other mutual funds
k. Repo/ reverse repo transactions in corporate debt securities
l. Credit Default Swap transactions
19. To provide circular references wherever applicable in support of exposure limits of
different types of asset classes in asset allocation.
Clarify whether, apart from the investment restrictions prescribed under SEBI (MF)
Regulations, does the fund follow any internal norms vis-à-vis limiting exposure to a
particular scrip or sector, etc.
20. Derivatives exposure for non-hedging purposes: Scheme to disclose exposure in
percentage terms of net assets of the scheme
21. Index Funds, ETF’s and FOFs:
Residual portion of 5% in asset allocation is provided for liquidity purposes and hence
instruments are to be of such nature.
Portfolio Rebalancing and Short Term Defensive Consideration
22. Under Portfolio Rebalancing section of SID give reference to Paragraph 3.11 or
4.5.5.of SEBI Master circular for Mutual Funds as the case may be. Further SID shall
disclose provisions stated in the said Paragraphs in the relevant part of SID.
23. Short term defensive consideration: Deviation occurring in view of short term
defensive consideration as per Paragraph 1.9.1(b) of SEBI Master circular for
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Mutual Funds to be provided separately from portfolio rebalancing as given in point
above
24. Paragraphs on rebalancing due to short term defensive consideration (active breach)
and passive breach shall be segregated (and not combined under the heading of
Portfolio Rebalancing)
Benchmark and Underlying Fund Details
25. Tier 1 benchmark to be as per AMFI published list in all schemes except Index Funds
and ETFs and FOF with single underlying fund
26. SID shall provide Details of Benchmark, Investment Objective, Investment Strategy,
TER, AUM, Year wise performance, Top 10 Holding/ link to Top 10 holding of the
underlying fund in case of Fund of Fund
Investment Strategy
27. Due care shall be taken in deciding whether the investment strategy is
"Passive"/"Active". (Ex: A Fund of funds scheme investing in multiple funds in its
portfolio is considered to have an active investment strategy)
28. Investment strategy to match the asset allocation pattern of the respective scheme.
(Ex: to not include strategy pertaining to derivatives in cases of funds not having
exposure to derivatives. If the Scheme intends to invest in derivatives, the strategies
associated with investments in derivatives shall be disclosed.)
Further, the following disclosures with respect to investment in derivatives be added:
“Derivative products are leveraged instruments and can provide disproportionate
gains as well as disproportionate losses to the investor. Execution of such strategies
depends upon the ability of the fund manager to identify such opportunities.
Identification and execution of the strategies to be pursued by the fund manager
involve uncertainty and decision of fund manager may not always be profitable. No
assurance can be given that the fund manager will be able to identify or execute
such strategies”.
“The risks associated with the use of derivatives are different from or possibly
greater than, the risks associated with investing directly in securities and other
traditional investments”.
Where shall Scheme invest section:
29. To include only those asset classes which are provided for in the asset allocation
30. Compliance with inter scheme asset transfer as mentioned at Paragraph 13.19 of
SEBI Master circular for Mutual Funds.
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31. Comply with Paragraph 13.1.8 of SEBI Master Circular for Mutual Funds for
investment limits relating to investing in HFCs
Fund Manager Disclosures
32. Dedicated fund manager is optional for commodity based assets and any overseas
component as per applicable SEBI circulars.
33. Who Manages The Scheme- Name, age, qualification and experience of the fund
manager shall be disclosed in relevant section of SID. The experience of the fund
manager shall include last 10 years and also the name of other schemes under his
/her management.
NFO Disclosures
34. Any modification to the New Fund Offer Period shall be announced by way of an
Addendum uploaded on website of the AMC.
35. "How to Apply" Section of SID shall provide details regarding availability of
application form from either the Investor Service Centres(ISCs)/Official Points of
Acceptance(OPAs) of Mutual Fund or may be downloaded from the website of AMC.
The list of the Investor Service Centres (ISCs)/Official Points of Acceptance (OPAs)
of the Mutual Fund shall be provided on the website of the AMC. Detailed procedure
shall be given in SAI
Ongoing Offer Disclosures
36. SID to disclose that there is no minimum balance requirement
37. Disclosure with respect to investment by minors shall be incorporated in SID in
accordance with Paragraph 15.13 of SEBI Master Circular for Mutual Funds.
Periodic Disclosures
38. Risk-o-meter and Scheme summary document to be part of periodic disclosures
39. In case of Index/ETFs, under periodic disclosures section of the scheme document,
AMC shall specify periodic disclosure of tracking error and tracking difference.
40. All the requirements specified in Paragraph 4.5 of SEBI Master Circular for Mutual
Funds related to “Passive Funds” shall be complied with and relevant disclosures
stipulated in the said circular shall be duly incorporated in the SID. Further an
undertaking regarding compliance with the said circular shall be provided in case of
“Passive Funds”
Disclosure of NAV shall be made under “Periodic Disclosures” section of SID
specifying timelines for disclosure of NAV and places where it shall be disclosed.
NAV Disclosures
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41. Disclosure of NAV shall be made under “Periodic Disclosures” section of SID
specifying timelines for disclosure of NAV and places where it shall be disclosed.
As per current SEBI Master Circular:
For FOFs – 10 am following business day
For schemes with ETCD exposures – 9 am following business day
For all other schemes – 11 pm same business day
42. SID shall include illustration on computation of NAV.
Recurring expenses
43. Cost towards investor education shall be in compliance with the requirements of
Paragraph 11.9 Of SEBI Master Circular for Mutual Funds (applicable only in case of
Index Funds/ ETFs/ FOFs)
44. SID shall include impact of TER/Returns on both Direct plan and regular plan through
an illustration.
45. In FOFs: To disclose that the TER of the scheme is within 2 times of the underlying
fund as per Regulation 66 (8)
46. Comply with Paragraph 11.6 of SEBI Master Circular for Mutual Funds on additional
incentive to distributors for bringing inflows from beyond top 30 cities (B30) and from
women investors.
Loads
47. No Entry Load shall be charged and exit load shall be charged in line with the
provisions of Regulation 44(4) and SEBI Master Circular for Mutual Funds.
Disclosure to the effect that the repurchase price shall not be lower than 95% of the
NAV.
Section on penalties, pending litigation or proceedings
48. Disclosure on Pending Penalties and Pending Litigations shall be provided as per the
relevant clause as prescribed in the SID format.
49. If penalty is paid it must specify on which date it was paid.
Other Disclosures
50. To not include blanket denial of service statements:
Example: Account statement is not proof of ownership of units held by the investor
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51. In case of Target Maturity Index Scheme, the index that scheme intends to
track/replicate shall be included in the approved Index List published by AMFI. To be
part of due diligence certificate and filing letter of the draft SID.
52. Specify the disclosures pertaining to treatment of unclaimed redemption and IDCW
amounts in terms of Paragraph 15.5 of SEBI Master circular for Mutual Funds in SAI.
53. Mention the enabling provisions for creation of Segregated portfolio in accordance with
Paragraph 5.5 of SEBI Master Circular for Mutual Funds in SID. Detailed procedure for
creation of segregated portfolio to be provided in SAI.
54. Mention the provisions pertaining to applicability of swing pricing framework for
applicable debt schemes in accordance with the provisions of Paragraph 5.8 of SEBI
Master Circular for Mutual Funds in SID. Detailed provisions in this regard to be
provided in SAI.
(Applicable in case of open-ended debt mutual fund schemes (except overnight funds,
Gilt funds and Gilt with 10-year maturity funds))
55. Following undertaking shall be provided-
“You are required to give a due diligence certificate stating that the draft Scheme
Information Document is in accordance with the SEBI (Mutual Funds) Regulations.
You are again advised to specifically confirm whether there are any deviations from
the Regulations or whether subjective interpretations have been applied to the
provisions of the Regulations or where the AMC feels that any matter is required to
be brought to the notice of SEBI.
Further you are also advised to confirm that the contents of the SID including figures,
data, yields, etc. have been checked and are factually correct.”
“AMC has complied with the set of checklist applicable for Scheme Information
Documents”
56. No redemption/repurchase of units shall be allowed prior to the maturity of the
scheme. Investors wishing to exit may do so through stock exchange mode.
57. (a) The unit holders would have an option to hold the units in demat form in addition to
the account statement as per the current practice.
(b) unit holders who wish to trade in units would be required to have a demat account
(c) Application form shall be modified to provide for demat account details and other
details to enable exercise of the option as detailed above.
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58. The AMC shall not invest in any of the schemes unless full disclosure of its intention to
invest has been made in the Scheme Information Document and that the AMC shall
not be entitled to charge any fees on such investments may be disclosed.
59. The fundamental attributes of the scheme shall be disclosed in the Scheme
Information Document. The note shall also include the steps to be followed by the
Trustee for change in fundamental attributes, as required by the SEBI regulations.
The trustees shall ensure that no change in the fundamental attributes of any
scheme or the trust or fees and expenses payable or any other change which would
modify the scheme and affects the interest of the unitholders, shall be carried out
unless,
 SEBI has reviewed and provided its comments on the proposal
 written communication (including digital modes such as email/sms etc.) about
the proposed change is sent to each unitholder; and
 the unitholders are given an option to exit at the prevailing Net Asset Value
without any exit load for a period of at least 30 calendar days.
60. SID shall disclose the number of days within which the statement shall be dispatched
to the unitholders who subscribe to the units when the scheme is open for continuous
subscription after NFO as per the applicable guidelines.
61. Disclosure to the effect that it shall be mandatory for the investors of mutual fund
schemes to mention their bank account numbers in their applications/requests for
redemption.
62. The Scheme Information Document shall have no clause, which in effect limits the
jurisdiction for settlement of claims of the investors to a specific place/region.
63. A statement shall be incorporated on the last page of the Scheme Information
Document as follows "Notwithstanding anything contained in the Scheme Information
Document the provisions of the SEBI (Mutual Funds) Regulations, 2026 and the
Guidelines thereunder shall be applicable."
64. All information in the Scheme Information Document and KIM shall be updated,
considering the above observations, 30 calendar days before the launch of the
scheme.
65. The schemes are required to be approved by the trustees. While approving the
scheme, the trustees may also review the systems, adequacy of key personnel,
compliance mechanism, etc. as required under Regulation 22 (2). A letter from the
Trustees shall be submitted while filing a new Scheme Information Document,
confirming that the trustees have ensured that the asset management company
complies with the requirements of Regulation (2).
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-Signed-
CO / CEO
Disclosure of any deviations from applicable SEBI circulars and guidelines and best
practices:
Sl. SEBI Regulations, Deviation Rationale for the Page no. in
No Circulars and Guidelines deviation. SID
-Signed-
CO / CEO
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B. STANDARD OBSERVATIONS FOR STATEMENT OF ADDITIONAL INFORMATION
(SAI)
STANDARD OBSERVATIONS FOR SAI:
Sr. Standard Observation Remarks
No
1. If the AMC is undertaking other business activities as provided in Regulation 21(b) brief
details of the same giving SEBI registration particulars, if applicable, and certification that
there is no conflict of interest.
2. The details of sponsor shall also include a brief note on their activities.
3. The details pertaining to the key personnel of the AMC shall inter-alia include the age of the
person, educational qualification, total number of years' experience, type and nature of past
experience including assignments held during the last 10 years, etc. The number of persons
involved in equity research and fund management and their past experience must be
mentioned. If any of the key personnel is based elsewhere and not in the
registered/corporate office of the AMC, must be disclosed.
4. The detailed procedures followed for investment decisions, whether an individual or
committee takes decisions, role of chief executive of AMC in investment decisions, recording
of each investment decision, how these decisions and performance of schemes are
monitored by the AMC Board and the trustees, should be explained by way of a separate
paragraph in the Statement of Additional Information.
5. A brief note on the supervisory role performed by the Trustees, the number of meetings held
during the last year, systems set up by the trustees for monitoring the activities of the AMC.
6. Disclosure that no amendments to the trust deed shall be carried out without the prior
approval of SEBI and unitholders approval would be obtained where it affects the interests
of unitholder.
7. Share holding pattern of the AMC specifying the percentage holding of various
groups/companies.
8. The appointment of the AMC can be terminated by majority of the trustees or by seventy five
percent of the unitholders of the scheme.
9. The dispatch of dividend warrants shall be made within 30 calendar days of the declaration
of the dividend and despatch of redemption or repurchase proceeds shall be made within
10 working days from the date of redemption or repurchase.
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Sr. Standard Observation Remarks
No
10. Suspension or restriction of repurchase / redemption facility under any scheme of the mutual
fund shall be made applicable only after the approval from the Board of Directors of the
Asset Management Company and the Trustees. The approval from the AMC Board and the
Trustees giving details of circumstances and justification for the proposed action shall also
be informed to SEBI in advance.
11. If the work relating to transfer of units is processed in-house, disclosure that the charges are
at competitive rates and if the rates are higher, reasons for charging higher rates should be
disclosed.
12. Disclosure as to the procedure for seeking approval of the unitholders in specified
circumstances.
13. The SAI shall fully disclose the fund’s policy for dealing with unclaimed redemption amounts
in line with Paragraph 15.5 of Master Circular for Mutual Funds
14. The disclosure in respect of tax benefits to the mutual fund and the unit holders shall be in
accordance with prevailing tax laws.
15. The SAI shall have no clause, which in effect limits the jurisdiction for settlement of claims
of the investors to a specific place/region.
16. The application inviting subscription to the scheme should mention about the availability of
the facility of Multiple nominations and how the same can be availed. Necessary details in
this regard may also be disclosed in the SAI.
17. The table on Condensed Financial Information shall be provided as per the relevant clause
as prescribed in the SAI format.
18. A statement should be incorporated on the last page of the Statement of Additional
Information as follows "Notwithstanding anything contained in the Statement of Additional
Information the provisions of the SEBI (Mutual Funds) Regulations, 2026 and the Guidelines
thereunder shall be applicable."
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7. DISCLOSURES
A. INDICATIVE FORMAT OF DISCLOSURE ON PERFORMANCE OF OTHER SCHEMES
531
MANAGED BY THE FUND MANAGER
Name of Fund Manager:
Period 1 year 3 year 5 year
Scheme Benchmark Scheme Benchmark Scheme Benchmark
return % return (%) return % return (%) return % return (%)
Scheme 1
Scheme 2
Scheme 3
Scheme 4
Scheme 5
Scheme 6
Note:
a. The concerned fund manager manages X number of schemes of the concerned Mutual Fund.
b. In case the number of schemes managed by a fund manager is more than six, performance data of
other scheme the top 3 and bottom 3 schemes managed by fund manager has been provided herein.
c. Period for which scheme’s performance has been provided is computed basis last day of the month-
end preceding the date of advertisement
d. Different plans shall have a different expense structure. The performance details provided herein are
of (regular / direct) plan.
531 SEBI Cir no SEBI/CIR/IMD/DF/23/2017 dated March 15, 2017
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B. BROKERAGE AND COMMISSION PAID TO ASSOCIATES
Brokerage paid to associates/related parties/group companies of Sponsor/AMC532
Name of Nature of Period covered* Value of Brokerage excl. All statutory
associate Association/ transaction ( in statutory levies levies (Rs. Cr
/related Nature of Rs. Cr. & % of (Rs Cr & % of & % of total
parties/ relation total value total brokerage
group of transaction of brokerage paid paid by
companies the fund ) by the fund)
of the fund)
Sponsor/
AMC
Commission paid to associates/related parties/group companies of sponsor/AMC
Name of Nature of Period covered * Business given Commission All statutory
associate Association/ (Rs. Cr. & paid excl. levies on
/related Nature of % of total statutory levies Commission
parties/ relation business ( Rs & % of total Paid
group received by the commission ( Rs & % of
companies fund) paid by total
of the fund) commission
Sponsor/ paid by
AMC the fund)
* The period covered shall be as following:
• SAI - Past three financial years including the current year
• Half Yearly Unaudited Financial Results – Current half year and previous half year
• Abridged Scheme wise Annual Report – Current year and previous year
The disclosures for the aforementioned period shall be furnished for each period in separate tables.
532 SEBI/IMD/CIR No 18 / 198647 /2010 dated March 15 ,2010
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C. ROLE OF MUTUAL FUNDS IN CORPORATE GOVERNANCE OF PUBLIC LISTED
533
COMPANIES
(i) Format for disclosure of vote cast by Mutual Funds - during an individual quarter:
Details of Votes cast during the quarter ended __, of the Financial year __-__
Meetin Compan Type of Proposal Proposal's Investee Vote (For/ Reason supporting the
g Date y Name meetings by description company’s Against/ vote decision
(AGM/EG Manageme Management Abstain)
M) nt or Recommendati
Sharehold on
er
(ii) Format for disclosure of voting by Mutual Funds/AMCs during a financial year
Details of Votes cast during the Financial year __-__
Quart Meeting Company Type of Proposal Proposal's Investee Vote (For/ Against/ Reason
er Date Name meetings by description company’s Abstain) supportin
(AGM/EG Manageme Management g the
M) nt or Recommendati
vote
Sharehold on
decision
er
(iii) Format of providing the summary of proxy votes cast by Mutual Funds/AMCs across all the investee
companies
Summary of Votes cast during the F.Y. ___-___
F.Y. Quarter Total Break-up of Vote decision
no. of
resoluti
For Against Abstained
ons
533 SEBI/IMD/DF/05/2014 dated March 24, 2014, SEBI/IMD/CIR No 18 / 198647 /2010 dated March 15 ,2010,
SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021
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D. DISCLOSURE OF INVESTOR COMPLAINTS WITH RESPECT TO MUTUAL
534
FUNDS
Redressal of Complaints received during the period: DD/MM/YYYY to DD/MM/YYYY
Name of the Mutual Fund:
Total Number of Folios:
Data for every month ending
Part A: Total complaints report (including complaints received through SCORES)
Action on (a) and (b)
(a) No.
of (b) No Resolved Pending
complai
Co Type of nts of Avera Non
mpl complaint# pending compla Wit 30- 60 Beyo ge Action Beyo
aint at ints hin 60 - nd time able 0-3 3-6 6-12 nd
cod the receive 30 days 18 180 taken * month montmonths 12
e d s hs
beginni day 0 days ^ (in month
during
ng of s day days) s
the
the s
perio
period
d
Non receipt of
amount declared
under Income
I A Distribution cum
Capital Withdrawal
option
Interest on delayed
payment of amount
I B declared under
Income Distribution
cum Capital
Withdrawal option
534 SEBI Circular No. SEBI/HO/IMD-II/IMD-II_DOF10/P/CIR/2021/00677 dated December 10,2021
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Non receipt of
I C Redemption
Proceeds
Interest on delayed
I D payment of
Redemption
Non receipt of
Statement of
II A
Account/Unit
Certificate
Discrepancy in
II B Statement of
Account
Data corrections in
II C
Investor details
Non receipt of
Annual
II D
Report/Abridged
Summary
Wrong switch
III A
between Schemes
Unauthorized
III B switch between
Schemes
Deviation from
III C
Scheme attributes
Wrong or excess
III D
charges/load
Non updation of
changes viz.
III E address, PAN,
bank details,
nomination, etc
Delay in allotment of
III F
Units
Unauthorized
III G
Redemption
IV Others
# including against its authorized persons/ distributors/ employees. etc.
*Non actionable means the complaint that are incomplete / outside the scope of the mutual fund
^ Average Resolution time is the sum total of time taken to resolve each complaint in days, in the current month
divided by total number of complaints resolved in the current month.
Page 714 of 748
Formats for Master Circular for Mutual Funds as on March 20, 2026
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Part B: Report on complaints received through SCORES
Action on (a) and (b)
(a) No.
of (b) No Resolved Pending
of
Compl complai
complai
Avera Non
aint Type of nts nts Wit 30 60 Beyo ge Actiona Beyo
code complaint# pendin receive hi - - nd time ble 0-3 3-6 6-12 nd
g at the d n 6 18 180 taken * mont mont mont 12
beginni hs hs hs
during 3 0 0 days ^ (in month
ng of
Non receipt the the 0 da da days) s
of amount period period day ys ys
I A s
declared
under
Income
Distribution
cum Capital
Withdrawal
option
Interest on
delayed
I B
payment of
amount
declared
under
Income
Distribution
cum
Capital
Withdrawal
option
Non receipt
I C
of
Redemptio
n Proceeds
Interest on
I D
delayed
payment of
Redemptio
n
Non receipt
II A
of
Statement
of
Account/Un
it Certificate
Discrepanc
II B
y in
Page 715 of 748
Formats for Master Circular for Mutual Funds as on March 20, 2026
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Statement
of Account
Data
II C
corrections
in Investor
details
II D Non receipt
of Annual
Report/Abri
dged
Summary
Wrong
III A
switch
between
Schemes
Unauthoriz
III B
ed switch
between
Schemes
Deviation
III C
from
Scheme
attributes
Wrong or
III D
excess
charges/loa
d
Non
III E updation of
changes
viz.
address,
PAN, bank
details,
nomination,
etc
III F Delay in
allotment of
Units
III G Unauthoriz
ed
Redemptio
n
IV Others
# including against its authorized persons/ distributors/ employees. etc.
*Non actionable means the complaint that are incomplete / outside the scope of the mutual fund
Page 716 of 748
Formats for Master Circular for Mutual Funds as on March 20, 2026
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^ Average Resolution time is the sum total of time taken to resolve each complaint in days, in the current month
divided by total number of complaints resolved in the current month.
Part C: Trend of monthly disposal of complaints (including complaints received through
SCORES)
SN Month Carried forward from previous month Received Resolved* Pending**
1 2 3 4 5 6
1 April- YYYY
2 May- YYYY
3 June- YYYY
4 July- YYYY
5 ……….
6 ……….
March-
YYYY
Grand Total
*Should include complaints of previous months resolved in the current month. If any.
** Should include total complaints pending as on the last day of the month, if any.
Page 717 of 748
Formats for Master Circular for Mutual Funds as on March 20, 2026
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Part D: Trend of annual disposal of complaints (including complaints received through SCORES)
SN Year Carried Received Resolved Pending at the
forward during the during the end of the
from year year year
previous
year
1 2021-22
2 2022-23
3 2023-24
4 2024-25
5 2025-26
Grand Total
Page 718 of 748
Formats for Master Circular for Mutual Funds as on March 20, 2026
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E. FORMAT FOR DISCLOSURE OF TOTAL EXPENSE RATIO (TER) OF MUTUAL FUND
535
SCHEMES
Name of Scheme: XYZ
Date Regular Plan Direct Plan
(DD/MM/
Base Brokerage Transa Statutor Total Base Brokerage Transactio Statu Total
YYYY)
Expen cost (%)2 ction y Levies TER Expe cost (%) n Cost tory TER
se Cost (includin (%) nse incurred Levie (%)
Ratio incurr g GST) Ratio for the s
(BER) ed for (%)4 (%)1 purpose of (incl
(%)1 the execution udin
purpo of trade g
se of (%) GST)
execut (%)4
ion of
trade
(%)3
1. Base Expense Ratio as per Regulation 66(7) of SEBI (Mutual Funds) Regulations, 2026.
2. Brokerage Cost as per Regulation 66(9) of SEBI (Mutual Funds) Regulations, 2026.
3. Transaction cost incurred for the purpose of execution of trade as referred under Regulation 66(10) of SEBI (Mutual Funds)
Regulations, 2026.
4. Present GST rate is XX%.
5. Percentages mentioned above are annualized.
6. Base Expense Ratio of direct plan shall have a lower expense ratio excluding distribution expenses, commission, etc., and
no commission shall be paid from such plans.
535 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2018/18 dated February 5, 2018 and SEBI Cir no SEBI/HO/IMD/DF2/CIR/P/2018/91 dated
June 05, 2018
Page 719 of 748
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536
F. FORMAT FOR DISCLOSURE OF CALL OPTIONS WRITTEN
In terms of Paragraph 13.15.1 of Master Circular for Mutual Funds, call options written shall be
disclosed in the following format:
Underlying No. of % of Option Current Margin
contracts underlying price option price maintained in
shares when sold Rs. Lakhs
Call options written as percentage of total market value of equity shares held in the
scheme
For the period ended … specify the following for call options written which have
already been exercised/expired
· Total Number of contracts entered into
· Gross Notional Value of contracts
· Net Profit/Loss on all contracts
536 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2019/17 dated January 16, 2019
Page 720 of 748
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G. REPORTING FORMATS FOR CREDIT DEFAULT SWAPS (CDS)537
A. Format for disclosure to be made in the monthly portfolio statements and half-yearly trustee
report
Counter Party Details Details of the underlying Details of Protection Credit
event
payments
received
Name Rating Sector Name of Amount Residual Amount Tenor Price/ Premium
the (FV) Maturity Spread Paid
reference (bps)
entity
(Amount in Rs. crore, Residual Maturity/ Tenor in years)
B. Format for disclosure to be made in the notes to account of annual report of the mutual
funds
1. No. of transactions during the year
2. Amount of protection bought during the year
3. No. of transactions where credit event payment was received during the year
a. Pertaining to current years transactions.
b. Pertaining to previous year (s) transactions.
4. Outstanding transactions as on year end:
a. No. of transactions
b. Amount of protection
5. Net income/expenses in respect of CDS transactions during year-to-date:
a. Premium paid
b. Credit event payments received (net of value of derivable obligations)
537 SEBI Circular No. CIR/IMD/DF/23/2012 dated November 15, 2012
Page 721 of 748
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H. FORMAT FOR DISCLOSURE OF INFORMATION RATIO (IR)
The format for disclosure of IR shall be accessed through the following link:
https://www.sebi.gov.in/sebi_data/commondocs/jan-2025/AnnexureA_to_circular_1_p.xlsx
Page 722 of 748
Formats for Master Circular for Mutual Funds as on March 20, 2026
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8. FORMATS RELATING TO SEBI (PIT) REGULATIONS
A. DISCLOSURES UNDER SEBI (PROHIBITION OF INSIDER TRADING)
REGULATIONS, 2015
[REGULATION 5E (1)]
Details of holdings in the units of its mutual fund schemes held by the Designated Persons of
AMC, Trustees and their immediate relatives as on <Last day of the Quarter>
Name of Name of Scheme Units held by Value Date of reporting to
the Mutual the Code Designated (INR) Exchange
Fund Scheme [ISIN] Persons*
*Designated Persons of AMC/ trustees/ immediate relatives of Designated Persons of
AMC/Trustee Company
Page 723 of 748
Formats for Master Circular for Mutual Funds as on March 20, 2026
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B. DISCLOSURES UNDER SEBI (PROHIBITION OF INSIDER TRADING)
REGULATIONS, 2015
[Regulation 5E (2)]
Details of all the transactions in the units of its own mutual funds by Designated Persons of asset
management company, trustees and their immediate relatives, above the threshold prescribed by SEBI
Transa
Dat Sch Date
Name PAN of Clo ction
e of Name eme Name of Catego Openi No. of Units Val of
of the the Name sing Type
Tra of the cod Designat ry of ng (Purchase/S ue report
Mutu Design of Inve Bal (Purcha
nsa Sche e ed Investo Balan ale/ (IN ing to
al ated stor anc se/
ctio me [ISI Person r* ce Redemption) R) Exch
Fund Person e Redem
n N] ange
ption)
*Designated Person of AMC/ trustees/ immediate relative of Designated Person of AMC/Trustee Company
Page 724 of 748
Formats for Master Circular for Mutual Funds as on March 20, 2026
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C. REPORT BY (NAME OF THE ASSET MANAGEMENT
COMPANY/INTERMEDIARY/FIDUCIARY) FOR VIOLATIONS RELATED TO CODE OF
CONDUCT UNDER SEBI (PROHIBITION OF INSIDER TRADING) REGULATIONS, 2015
[For asset management companies: Schedule B1 read with Regulation 5F(1) of SEBI(Prohibition of
Insider Trading) Regulations, 2015
For Intermediaries/ Fiduciaries: Schedule C read with Regulation 5F(2) of SEBI(Prohibition of
Insider Trading) Regulations, 2015]
Sr. Particulars Details
No.
1 Name of the asset management company/ Intermediary/Fiduciary
2 Please tick appropriate checkbox
Reporting in capacity of :
☐ Asset Management Company
☐ Intermediary
☐ Fiduciary
3 A. Details of Designated Person (DP)
i. Name of the DP
ii. PAN of the DP
iii. Designation of DP
iv. Functional Role of DP
v. Whether DP is Promoter/Sponsor/Trustee or belongs to Promoter/Sponsor/Trustee
Group
B. If Reporting is for immediate relative of DP
i. Name of the immediate relative of DP
ii. PAN of the immediate relative of DP
C. Details of transaction(s)
i. Name of the scrip/scheme
ii. No of shares/units traded and value (Rs.) (Date- wise)
D. In case value of trade(s) is more than Rs.15 lakhs in a calendar quarter
i. Date of intimation of trade(s) by concerned DP of AMC, trustee and their immediate
relatives under regulation 5(E)(2) of SEBI (PIT) Regulations, 2015
ii. Date of intimation of trade(s) by asset management company to stock exchanges
under regulation 5(E)(3) of SEBI (PIT) Regulations, 2015
Page 725 of 748
Formats for Master Circular for Mutual Funds as on March 20, 2026
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4 Details of violations observed under Code of Conduct
5 Action taken by asset management company/ Intermediary/ Fiduciary
6 Reasons recorded in writing for taking action stated above
7 Details of the previous instances of violations, if any, since
8 If any amount collected for Code of Conduct violation(s)
i. Mode of transfer to SEBI - IPEF (Online/Demand Draft)
ii. Details of transfer/payment
In case of Online:
Particulars Details Particulars Details
Name of the transferor
Bank Name, branch and
Account number
UTR/Transaction reference
Number
In case of Demand Draft (DD):
Particulars Details Particulars Details
Bank Name and branch
DD Number
DD date
DD amount (in Rs.)
9 Any other relevant information
Yours faithfully,
Date and Place Name and Signature of Compliance Officer
PAN:
Email ID:
Page 726 of 748
Formats for Master Circular for Mutual Funds as on March 20, 2026
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9. MISCELLANEOUS FORMATS
A. FORM TO REPORT ON AI AND ML TECHNOLOGIES – TO BE SUBMITTED
QUARTERLY INTIMATION TO AMFI FOR THE USE OF THE AI AND ML
538
APPLICATIONS AND SYSTEMS
S/N Head Value
1 Entity SEBI registration number
2 Registered entity category
3 Entity name
4 PAN of Entity
5 Application / System Name
6 Date from which the Application / System was used
7 Type of area where AI or ML is used <order execution / Advisory
services / KYC / AML / Surveillance
/ Compliance/ Others (please
specify in 256 characters)>
7.a Does the system involve order initiation, routing and execution? <Yes / NO>
7.b Does the system disseminate investment or trading advice or <Yes / NO>
strategies?
7.c Is the application / system used in area of Cyber security to detect <Yes / NO>
attacks
7.d What claims have been made regarding AI and ML application / <free text field>
system– if any?
8 What is the name of the Tool / Technology that is categorized as <free text field>
AI and ML system / Application and submissions are declared
vide this response
9 How was the AI or ML project implemented <Internally / through solution
provider / Jointly with a solution
provider or third party>
10 Are the key controls and control points in your AI or ML <free text field>
application or systems in accordance to circular of SEBI that
mandate cyber security control requirements
11 Describe the application / system and how it uses AI / ML as <free text field>
portrayed in the product offering
12 What safeguards are in place to prevent abnormal behavior of the <free text field>
AI or ML application / System?
13 Is the AI / ML system included in the scope of system audit, if <Yes / NO>
applicable?
14 Is there any adverse comment in the system audit regarding the <free text field>
AI / ML system? If yes, details of the adverse comments may be
provided.
538 SEBI circular no. SEBI/HO/IMD/DF5/CIR/P/2019/63 dated May 09, 2019
Page 727 of 748
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539
B. SYSTEM AUDIT EXCEPTION (OBSERVATION) REPORTING FORMAT
Note: Mutual Funds are expected to submit following information with regards to exceptions
observed in the System Audit, including open observations from previous audit report.
Name of the Mutual Fund: ___________________
Systems Audit Report Date: _________________
Table 1:
High/ Medium risk exceptions observed in the System Audit, including open observations from
previous audit report
Whether Managem
Audit
similar issue ent
Objective Audit Description Auditor’s
S Department Risk Audited was observed Comment
Checklist Objective of Recommend Trustee
No. Name Rating By in any of the with
Question Heading Observation ation Comme
previous 2 target
Number nt
audits date
Description of relevant Table heads
1. S No. – This indicates the serial number of the observation.
2. Audit Objective Checklist Question Number – This indicates question number in the guideline
audit checklist
3. Audit Objective Heading – This indicates heading in the guideline audit checklist
4. Department Name – name of auditee department to which the observation pertains to e.g. PMS,
R&TA, IT, Admin etc.
5. Description of Observation – Description of the observation in sufficient detail
539 SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2019/57 dated April 11, 2019
Page 728 of 748
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6. Risk Rating – Observation’s rating based on its impact and severity to reflect risk exposure.
Rating Description
High rating represents weakness in control with respect to threat(s) that is/are sufficiently
capable and impacts asset(s) leading to regulatory noncompliance, significant financial,
HIGH
operational and reputational loss. These observations need to be addressed with utmost
priority.
Medium rating represents weakness in control with respect to threat(s) that is/are capable
MEDIUM and impacts asset(s) leading to exposure in terms of financial, operational and
reputational loss. These should be addressed reasonably promptly.
Low rating represents a weaknesses in control, which in combination with other weakness
LOW can develop into an exposure. Suggested improvements for situations not
immediately/directly affecting controls.
7. Audit By – Name of the firm/ company performing the system audit
8. Auditor’s Recommendation – A detailed recommendation by auditor for correction of the
observation and/ or implementation of the corrective actions.
9. Whether similar issue was observed in any of the previous 2 audits – Yes/ No if similar issue
was observed in previous two audit reports.
10. Management Comment with target date – Management action plan/taken to address the
observation and/ or implementation of auditor’s recommendation with target date to
address/implement.
11. Trustee Comment– Trustee comments with respect to management action plan/taken to
address the observation and/ or implementation of auditor’s recommendation with target date
to address/implement.
Page 729 of 748
Formats for Master Circular for Mutual Funds as on March 20, 2026
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Table 2:
Low risk observations in current audit which were observed in previous two System audit
reports:
Audit Management Trustee Comment
Objective Audit Comment with
S Description of
Checklist Objective Risk Rating target date
No. Observation
Question Heading
Number
Low
Description of relevant Table heads
1. S No. – This indicates the serial number of the observation.
2. Audit Objective Checklist Question Number – This indicates question number in the
guideline audit checklist
3. Audit Objective Heading – This indicates heading in the guideline audit checklist
4. Description of Observation – Description of the observation in sufficient detail
5. Risk Rating – Observation’s rating based on its impact and severity to reflect risk exposure.
6. Management Comment with target date – Management action plan/taken to address the
observation and/ or implementation of auditor’s recommendation with target date to
address/implement.
7. Trustee Comment– Trustee comments with respect to management action plan/taken to
address the observation and/ or implementation of auditor’s recommendation with target date
to address/implement
Page 730 of 748
Formats for Master Circular for Mutual Funds as on March 20, 2026
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Table 3:
Follow on Audit for Open Items reported in Table 1 and Table 2 of Previous System Audit
Report
Managem Trustee
ent Comme
Reason for Observati
Descripti Recommenda Comment nt
S Risk delay in on Status
Audit Departm on of tion as per with
N Ratin implementati as per
ed By ent Name Observati previous audit revised
o. g on/ current
on report [Target]
compliance auditor
Closure
Date
Description of relevant Table heads
2. S No. – Serial number
3. Audited By – Name of the firm that performed audit
4. Department Name – name of auditee department to which the observation pertains to e.g. PMS,
R&TA, IT, Admin etc.
5. Description of Observation –Description as per previous System Audit report
6. Risk Rating of Observation – Risk rating as per previous System Audit report
7. Previous Auditor’s Recommendation –Recommendation as per previous System Audit report
8. Reason for delay in implementation / compliance – Details of reason for delay in addressing
the observation/ implementation of corrective action.
9. Observation Status per current auditor – Status of observation in reference to recommendation
and management action plan mentioned in the previous system audit report.
10. Revised [Target] Closure date with Management Comment – Revised closure date or target
closure date for the observation. Management comment is necessary if observation status is not
closed as per current auditor.
11. Trustee Comment– Trustee comments with respect to revised closure date or target closure date
for the observation.
Page 731 of 748
Formats for Master Circular for Mutual Funds as on March 20, 2026
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C. FORMAT FOR TEMPLATE WITH RESPECT TO INTER SCHEME TRANSFERS540
a. For meeting liquidity requirement due to redemption pressure
Template for ISTs due to Liquidity Management
ISIN of security to be transferred
Name of security to be transferred
Date and time of ISTs
Transferor Transferee
Particular
Scheme Scheme
Category of scheme
As per LRM minimum cash & cash equivalent required for
the scheme
Net cash position after projected inflow and outflow
Line available and borrowing utilized (record, in case
borrowing was not utilized) #
Not Applicable
Sale proceeds of the securities utilized (record with evidence
including screenshot of Request For Quote (RFQ), the
attempt to sell liquid assets in market) Not Applicable
If all above is not sufficient then
ISTs of optimal mix of low duration paper with highest quality
paper and so on Not Applicable
Declaration:
1. IST is in the interest of unit holders.
2. Quality of security under ISTs is not suspect i.e. no adverse news or rumors in the
mainstream media about the said security, nor any credit alert for last four months.
3. Fund Manager of transferee scheme confirms that he/she has done full credit risk
assessment of security before buying the same through ISTs, and the same is
documented.
Name and Signature of Fund Managers
Name and Signature of Chief Investment officer
Name and Signature of Compliance officer
540 SEBI Circular No. SEBI/HO/IMD/DF4/CIR/P/2020/202 dated October 08, 2020
Page 732 of 748
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# The use of market borrowing before ISTs will be optional and at the discretion of Fund Managers.
b. For Duration rebalancing
Template for ISTs to rebalance Duration
ISIN of security to be transferred
Name of security to be transferred
Date and time of ISTs
Transferor Transferee
Particular
Scheme Scheme
Category of scheme
Pre trade duration of scheme
Post trade duration of scheme
Interest rate view of Fund Manager
Request for Quote (RFQ) screen shot
Declaration:
1. IST is in the interest of unit holders.
2. Quality of security under ISTs is not suspect i.e. no adverse news or rumors in the
mainstream media about the said security, nor any credit alert for last four months.
3. Fund Manager of transferee scheme confirms that he/she has done full credit risk
assessment of security before buying the same through ISTs, and the same is
documented.
Name and Signature of Fund Managers
Name and Signature of Chief Investment officer
Name and Signature of Compliance officer
c. For Issuer/Sector/Group rebalancing
Template for ISTs to rebalance Issuer/Sector/Group concentration
ISIN of security to be transferred
Name of security to be transferred
Date and time of ISTs
Page 733 of 748
Formats for Master Circular for Mutual Funds as on March 20, 2026
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Transferor Transferee
Particular
Scheme Scheme
Category of scheme
Pre trade concentration of Issuer/Sector/Group
Limit specified in SEBI Regulations/circular/ guidelines for
Issuer/Sector/Group
Post trade concentration of Issuer/Sector/Group
Outlook of Fund Manager of transferee scheme about
security at the time ISTs
Request for Quote screen shot
Declaration:
1. IST is in the interest of unit holders.
2. Quality of security under ISTs is not suspect i.e. no adverse news or rumors in the
mainstream media about the said security, nor any credit alert for last four months.
3. Fund Manager of transferee scheme confirms that he/she has done full credit risk
assessment of security before buying the same through ISTs, and the same is
documented.
Name and Signature of Fund Managers
Name and Signature of Chief Investment officer
Name and Signature of Compliance officer
Page 734 of 748
Formats for Master Circular for Mutual Funds as on March 20, 2026
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D. INVESTOR CHARTER FOR MUTUAL FUNDS 541
VISION
 To develop the Indian Mutual Fund Industry and bring a high degree of professionalism
transparency and ethics by enacting regulations to govern the functioning of mutual funds in order
to enhance and maintain standards to protect and promote the interests of unit holders of mutual
funds.
MISSION
 To support the development of a vibrant, transparent, ethical and globally competitive asset
management industry.
 To enact and enforce rules and regulations that promote the maintenance of high professional and
ethical standards in all areas of operation of the mutual fund industry.
 To work closely with the mutual fund industry in order to recommend and promote good business
practices and a code of conduct to be followed by all asset management companies engaged in
the activities of investment management in the best interests of unitholders / investors.
 To recommend standardized operational processes to be followed by the Mutual Fund industry for
the convenience and benefit of the investors.
 To undertake nationwide investor awareness programmes, so as to inform and educate existing
and prospective investors about mutual funds as an asset class and to educate the public about
the concept and working of mutual funds.
 To protect the interest of investors/unit holders.
DESCRIPTION OF ACTIVITIES / BUSINESS OF THE ENTITY
 To offer investment opportunities to the investors through various schemes.
 To pool money by issuing units to the investors at the applicable Net Asset Value (NAV).
 Deploy the monies pooled from investors in various securities and manage the portfolio in
accordance with objectives as disclosed in offer document and in compliance with all applicable
regulations.
541 SEBI/HO/IMD-II/IMD-II_DOF10/P/CIR/2021/00677 dated December 10, 2021
Page 735 of 748
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 Disclose various information including NAV on daily basis, Risk-o-meter of schemes, portfolio of
the schemes, performance of the schemes, annual report or abridged annual report etc.
 Pay redemption proceeds, dividends etc. to the investors.
 Process investor’s financial and non – financial transactions / service requests.
Page 736 of 748
Formats for Master Circular for Mutual Funds as on March 20, 2026
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SERVICES PROVIDED FOR INVESTORS
Non-Financial Transaction
Sr. no Description of Service / Activity Time taken for providing service
1 Providing physical Consolidated Account Statement th
by 15 of succeeding month
(CAS) for each calendar month
2. Providing e-CAS for each calendar month By 12th of succeeding month
3 Providing physical CAS for the half year By 21st of succeeding month
4 Providing e-CAS for the half year By 18th of succeeding month
5 Request for Dematerialisation of units 2 Days *
Financial Transactions (Commercial Transactions)
Sr. no. Description of Service / Activity Time taken for providing service
1 Pay-out of redemption proceeds
3 working days- for all the schemes other
than below
5 working days- for schemes investing in
schemes investing at least 80% of total assets
in permissible overseas investments
2 Pay-out of IDCW from the record date
7 working days
3 Pay-out of proceeds on maturity of a close- ended 3 working days
scheme
Issue of statement of accounts specifying the number 5 working days from the date of closure of
4 of units allotted or issue units in the dematerialized the initial subscription list or from the date of
form receipt of the application
Refund of subscription Money in case of New Fund 5 working days from the date of closure of
5 Offer the initial subscription list
Complaints/Requests
Sr. Description of Service / Activity Time taken for providing service*
no.
Submission of ATR to SEBI in respect of complaint 21 calendar days
1 received from investor through SCORES
Disclosure / Reports
Sr. Description of Service / Activity Time taken for providing service
no.
Intimation regarding change in TER of schemes 3 working days in advance of TER effective
1 date
Intimation regarding change in Fundamental Attributes 30 calendar days prior to the effective date
2 of schemes (Exit Window) of Fundamental Attribute change
3 Intimation regarding Merger of schemes 30 calendar days prior to the effective date
of Merger
Page 737 of 748
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4 Intimation regarding Conversion of Close Ended 30 calendar days prior to the effective date
Scheme to Open Ended Scheme of conversion
5 Disclosure of Daily NAV other than FOF Schemes Daily by 11 pm
6 Disclosure of Daily NAV of FOF Schemes T+1 by 10 am
7 Disclosure of Fortnightly Portfolio of Schemes (Debt within 5 calendar days.
Schemes)
8 Disclosure of Monthly Portfolio of Schemes within 10 calendar days
9 Disclosure of Risk-o-meter by 10th calendar day of every month
10 Disclosure of TER of scheme Every day
11 Disclosure of Annual report of Schemes / abridged Every year before July 31
scheme wise Annual Report
12 Disclosure of Annual report of AMC Within 4 months from the end of the
financial year
13 Disclosure of half Yearly Unaudited Financials within 1 month from end of the half-year
14 Disclosure of notice in respect of IDCW declaration Within one calendar day of the decision by
the trustees
15 Disclosure of Complaints redressal report within 7th calendar day of succeeding
month
16 Disclosure of Asset Under Management 7 days from the end of the month
17 Disclosure of transactions in debt and money market 15 days from each transaction day
securities
18 Disclosure of half yearly updated scheme information 2 month from the end of the half-year
document
19 Disclosure of half yearly updated Key Information 2 month from the end of the half-year
Memorandum
20 Disclosure of statement of additional information 3 months from end of financial year
21 Disclosure of Executive Remuneration 1 month from the end of financial year.
Notes:
1. * All the above mentioned time taken for providing service (Financial & Non-Financial) will be
subject to receipt of complete documentation/information from the investor.
2. Day refers to working day unless otherwise specified.
3. The Asset Management Companies which fail to meet the stipulated timelines maybe liable for
suitable action as deemed fir in terms of SEBI Act, 1992 or regulations framed thereunder.
GRIEVANCE REDRESSAL MECHANISM FOR INVESTORS
1. In case of any grievance / complaint, an investor should approach the concerned Mutual Fund /
Investor Service Centre of the Mutual Fund. If the complaint remains unresolved, the investor may
write to the designated Investor Relations Officer of the mutual fund. The name of the Investor
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Relations Officer / contact person is generally mentioned in the Scheme Information Document
(SID) of the mutual fund scheme, and also on the website of the concerned mutual fund, whom
one may approach / write to in case of any query, complaints or grievance.
2. If the investor’s complaint is not redressed satisfactorily, one may lodge a complaint with SEBI on
SEBI’s portal, named , 'SCORES', which is a centralized web based complaints redress system.
SEBI takes up the complaints registered via SCORES
(https://scores.gov.in/scores/Welcome.html) with the concerned mutual fund / intermediary for
timely redressal. SCORES facilitates tracking the status of the complaint.
3. Investors may send their physical complaints to: Office of Investor Assistance and Education,
Securities and Exchange Board of India, SEBI Bhavan. Plot No. C4-A, ‘G’ Block, Bandra-Kurla
Complex, Bandra (E), Mumbai - 400 051
4. If the complaint remains unresolved on SCORES or the investor is dissatisfied with the resolution
provided, the investor may opt for the Online Dispute Resolution (ODR) mechanism as prescribed
by SEBI. The ODR mechanism provides resolution of disputes through online conciliation and/or
arbitration in a time-bound and cost-effective manner and can be accessed at
https://smartodr.sebi.gov.in
DO’s and DON’Ts FOR INVESTORS
Do’s
1. Check registration status of the Mutual Fund on SEBI website before transacting with them.
2. Read all Scheme related documents and understand the scheme features and the risks involved
and suitability of the scheme to the investor’s risk profile.
3. Provide and keep updated KYC details including address, tax status, residency, and other key
information such as PAN & bank account details.
4. Provide own email address and mobile number and to promptly notify changes to this information,
if any.
5. Check Account Statement & Common Account Statements for discrepancy, if any and promptly
bring any such discrepancies to the notice of the Asset Management Company
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6. Read communications / notices / addendums / press releases, etc. sent / or published by the
mutual fund via newspapers, email, etc.
7. Consider availing nomination facility in respect of investments made in Mutual Funds.
8. Choose the plan for investments i.e. Direct Plan or Regular Plan.
9. Invest through registered and regulated entities
10. Keep confidential critical information such as user ID, password, etc.
11. Invest by issuing payments in the name of the Mutual fund / scheme only and not in the name of
any other entity.
Don’ts
1. Do not invest based on speculation, rumor or informal advice.
2. Do not fall for the promise of indicative or exorbitant or assured returns.
3. Do not issue blank cheques or blank signed transaction instructions.
4. Do not use third-party bank accounts for fund flows for subscription or redemption of units.
RIGHTS OF INVESTORS
1. Right to receive information and details about the scheme including about its investment
philosophy, risk profile, portfolio holdings, fees, charges and expenses and such other information
as may be required under SEBI regulations to enable investors to make an informed decision
about investing in a scheme, prior to making any such investment.
2. Right to timely receipt of account statement evidencing a transaction as specified in the SEBI
Mutual Funds Regulations, or to receive such statements on request.
3. Right to receive Consolidated Account Statement (CAS) at a periodic frequency as specified by
SEBI.
4. Right to timely disclosure of daily Net Asset Values (NAV), Portfolio and Performance of each
scheme including scheme’s AUM, investment objective, expense ratios on mutual fund website.
5. Right to receive Annual report / abridged annual report of the scheme(s) invested in,
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6. Right to timely receipt of redemption proceeds / IDCW payments / refunds, as applicable.
7. Right to be notified about any change in the fundamental attributes (features) of a mutual fund
scheme in which the investor has investments and to be provided a right to exit the scheme without
cost, if so desired, as a result of the fundamental attribute change.
8. Right to be informed about such disclosures which may have a material bearing on their
investments in mutual fund schemes.
9. Right to privacy of information in accordance with the applicable laws of the land.
10. Right to security of, and access to, information provided to Asset Management Companies and
their service providers in relation to investments in mutual funds. Right to have such information
corrected and receive confirmation of such correction.
11. Right to information about how complaints are handled and can be escalated in the event investors
are not satisfied with the resolution provided.
12. Right to timely redressal of grievances and complaints within the timelines specified by regulations
and the right to escalate complaint not resolved satisfactorily to the Investor Grievance Officer of
the respective Asset Management Company.
13. Right to escalate unresolved complaints to SEBI via the SCORES portal. In addition to SCORES,
investors can also opt for online dispute resolution (ODR) mechanism, which includes mediation
and/or conciliation and/or arbitration, in accordance with the procedure specified by the SEBI
RESPONSIBILITIES OF INVESTORS
1. To check registration status of the Mutual Fund on SEBI website before transacting with them.
2. To read all Scheme related documents and understand the scheme features and the risks
involved and suitability of the scheme to the investor’s risk profile.
3. To provide and keep updated KYC details including address, tax status, residency, and other key
information such as PAN & bank account details.
4. To provide own email address and mobile number and to promptly notify changes to this
information, if any.
5. To check Account Statement & Consolidated Account Statements for discrepancy, if any and
promptly bring any such discrepancies to the notice of the Asset Management Company
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6. To read communications / notices / addendums / press releases, etc. sent / or published by the
mutual fund via newspapers, email, etc.
7. To consider availing facility to nominate in respect of investments made in Mutual Funds.
8. To choose the plan for investments i.e. Direct Plan or Regular Plan.
9. To invest through registered and regulated entities and not to invest based on speculation,
rumor or informal advice
10. To keep confidential critical information such as user ID, password, etc.
11. To invest by issuing payments in the name of the Mutual fund / scheme only and not in the name
of any other entity.
12. To protect oneself by not falling for the promise of indicative or exorbitant or assured returns.
13. To protect oneself by not issuing blank cheques or blank signed transaction instructions.
14. To avoid using third-party bank accounts for fund flows for subscription or redemption of units.
*******
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E. LETTER TO UNITHOLDERS IN CASE OF CHANGE IN CONTROL542
Letter to all the Unitholders about the proposed change in control of
<<On the letter head of the Asset Management Company>>
Dear Unitholder,
Sub: Change in control of XXX Asset Management Company pursuant to merger/ takeover/
induction of new sponsor/ dilution of shareholding by existing shareholders
I. Background:
II. Nature of change in control:
a) In case of new Sponsor:
The activities of the new sponsor and its financial track record and performance
(as prescribed in the standard offer document) is as follows (requisite details to
be provided, if applicable): -----
b) In case of taking over of the schemes by an existing mutual fund registered with SEBI:
The condensed financial information of all the schemes in the format prescribed in
the standard offer document is available of the AMC’s website at << weblink*>> --
(requisite details to be provided, if applicable).
[*The web link to be provided for the data mentioned above should be accompanied
by a clause indicating that the unitholders may make a separate request for a hard
copy of the said details, if they wish. A dedicated email id. and the postal address
to which such request may be made by the unitholder shall be clearly mention.]
c) In case of new sponsor(s) or in case of taking over of the schemes by an existing
mutual fund:
The requisite undertakings as prescribed in Paragraph 2.5.4 of SEBI Master circular are
enclosed as Annexure -- (requisite details to be provided, if applicable).
d) In case any shareholders / sponsors diluting the shareholding below 10% and if
applicable, ceasing to be a co-sponsor:
Requisite details to be provided as per the specific case
III. Rationale for the change/s / Expected Benefits of the change/s:
IV. Effects of the proposed change:
542 SEBI Email to AMFI dated August 12, 2024
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V. Requisite approvals for the Proposed Transaction:
The Board of Directors of the AMC and Trustee Company have approved the above
change in control in their respective board meetings held on <date of the meeting (s)>.
SEBI vide its communication dated [Insert Date] has granted its prior/ final approval
for the proposed change in control.
The proposed changes shall be made subject to other requisite approvals, as
applicable.
VI. Option for exit to the unit holders without exit load for XX days: (not less than 15
calendar days or not less than 30 days in case the change in control resulting in
consolidation or merger of schemes)
The above-mentioned change would result in change in control within the meaning of
Regulation 17(c) of the MF Regulations.
As per regulation 17(c), SEBI (Mutual Funds) Regulations, 2026 (MF Regulations), no
change in control of an asset management company can be made unless the
unitholders are given an option to exit on the prevailing Net Asset Value (“NAV”) without
any exit load.
In accordance with the MF Regulations, and pursuant to the approval from SEBI, an
exit option is being provided to unit holders as on close of business hours on the record
date being [Insert Date] to exit from his/ her/ its investment in the Schemes of XXX
Mutual Fund [“Scheme(s)”] at the prevailing NAV without any exit load, for a period of -
-xx days from [Insert Date] to [Insert Date] (both days inclusive) (up to 3.00 p.m. on
[Insert last date]) if they do not wish to stay invested in the Schemes upon the change
in control becoming effective.
A list of all the schemes of XXX Mutual Fund along with their AUM and maturity date
(where applicable) as on............... is available on the AMC’s website at << weblink*>>.
[*The web link to be provided for the data mentioned above should be accompanied by
a clause indicating that the unitholders may make a separate request for a hard copy of
the said details, if they wish. A dedicated email id. and the postal address to which such
request may be made by the unitholder shall be clearly mentioned.]
Please note that the ‘no load’ exit option is not available to investments in the schemes
of XXX Mutual Fund which have not completed the statutory lock-in period / lock-in
period stated under Scheme Information Document on the date of exercising 'no load
exit option’.
However, Unitholders who have completed the statutory lock-in period will be eligible to
exercise the option to exit without being charged an exit load.
Further, such exit option will not be available to unit holders who have pledged or
encumbered their units in the Scheme and Mutual Fund has been instructed to mark a
pledge/lien on such units, unless the release of the pledge/ lien is obtained and
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appropriately communicated to AMC / Mutual Fund prior to applying for
redemption/switch-out.
VII. Procedure for exercising exit option:
The Exit Option can be exercised by submitting a normal redemption request at any
of the official points of acceptance of XXX Mutual Fund, details of which are available
in the relevant scheme information document (“SID”) / website viz. _______. In case
any existing unit holder has not received the letter relating to exit option, they are
advised to contact any of the Investor Service Centers of XXX AMC or download and
print the letter format from the website.
The redemption proceeds will be transferred electronically / dispatched to the
respective Unitholders within stipulated period from the date of receipt of the valid
redemption request.
Unit holders should procure a release of their pledges/ vacate the lien on units, if any,
prior to applying for redemption/ switch-out during the Exit Option Period. In case units
have been frozen / locked pursuant to an order of a government authority or a court,
such exit option can be executed only after the freeze / lock order is vacated / revoked
within the exit option period specified above.
In case any existing Unitholder has not received the letter relating to Exit Option, they
are advised to contact any of the Investor Service Centers of XXX Mutual Fund.
VIII. Expenses &Taxation:
The expenses related to the proposed change in …. and other consequential
changes as outlined above will NOT be charged to the unit holders of the
schemes of XXX Mutual Fund.
As regards the unit holders who redeem their investments during the Exit Option
Period, the tax consequences as set forth in the Statement of Additional Information
(SAI) of XXX Mutual Fund and Scheme Information Documents (SID) of the respective
scheme(s) would apply including deduction of tax at source (TDS) in accordance with
applicable tax laws. In view of individual nature of tax consequences, you are advised
to consult your financial / tax advisor for detailed tax advice.
IX. Others:
The details of the unclaimed redemption and unclaimed IDCW/dividend amounts as
of (date) along with the procedure for claiming the same by the unit holders is hosted
on our website at <<INSERT PATH/ LINK >>.*
[*The web link to be provided for the data mentioned above should be accompanied
by a clause indicating that the unitholders may make a separate request for a hard
copy of the said details, if they wish. A dedicated email id. and the postal address to
which such request may be made by the unitholder shall be clearly mentioned.]
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As a unit holder, you are requested to go through this communication carefully and
consult your Advisor in the event that you have any questions.
Unit holders having no objection to the proposed changes and wishing to remain
invested need not take any further action.
This option to exit is merely an option and not compulsory.
X. Updation of Scheme related documents:
The SAI, the SID, the KIM and other relevant documents relating to the Schemes
shall be appropriately amended and updated (wherever applicable) in accordance
with the MF Regulations, so as to reflect the relevant change(s) pursuant to change
in control.
Contact Details:
In case you need any further clarifications, please contact us on the details provided
below, who is primarily responsible to provide the clarification
<Contact details of Investor Relations Officer to be added>.
We will be happy to assist you.
With regards,
Yours faithfully
For <Name of the AMC>
Authorised Signatory
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F. DECLARATION FORM FOR OPTING OUT OF NOMINATION 543
To, Date:
D D D M M Y Y Y Y
Mutual Fund/ AMC’s Name
Mutual Fund/ AMC’s Address
Mutual Fund Folio Number
Sole/First Holder Name
Second Holder Name
Third Holder Name
I/We hereby confirm that I/We do not wish to appoint any nominee(s) for any mutual fund units held
in my/ our mutual fund folio and understand the issues involved in non-appointment of nominee(s)
and further are aware that in case of death of all the account holder(s), my/our legal heirs would
need to submit all the requisite documents issued by Court or other such competent authority, based
on the value of assets held in the mutual fund folio.
Name and Signature of Unitholder(s)
Unitholder (1) Signature: ______________________ Name: _______________________
Unitholder (2) Signature: ______________________ Name: _______________________
Unitholder (3) Signature: ______________________ Name: _______________________
543 SEBI Circular no. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2022/82 dated June 15, 2022
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10. REPORTING FORMATS FOR OFFSITE INSPECTION
As part of the off-site inspection and surveillance of Mutual Funds and to monitor the compliance of
the SEBI (Mutual Funds) Regulations, 2026 and circulars issued therein, the Board has framed the
data structures. Accordingly, all MF/AMCs along with RTAs associated with them shall furnish the
data in the prescribed formats to the Board. The said formats can be accessed using the link – offsite
inspection formats for Mutual Funds.
*******
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