This follows Sebi's investigation into after-hour deals carried out by MFs last month. Today, was the last date of submission of reports and the regulator is expected to take a decision on this over the next fortnight.
The Sebi had written letters to mutual funds seeking details regarding inflows into various debt schemes on September 29 to investigate whether any fund backdated the net asset value to help large investors take advantage of the bond rally on September 30.
It is believed that several mutual funds helped large institutional investors to make a killing in debt rally on September 30 by allowing them to shift from short-maturity schemes to bond funds.
These transactions were carried out after the Reserve Bank of India (RBI) had released the borrowing calendar which showed government borrowing to be Rs 35,000 crore less than expected. This announcement triggered a bond market rally the next day.
It is learnt that about Rs 500-600 crore were moved from liquid schemes to bond funds on September 29 evening. Generally, most funds accept applications till afternoon on a particular day but on that day apparently the cheques were accepted till as late as 10 pm.
A fund manager said such practices are not rare in the industry and it may not be easy to catch the guilty. "However, if the regulator is alert, it can prevent its recurrence in future," he said.
The matter was discussed by the best pratices committee of the Association of Mutual Funds in India. The committee also issued a directive to MFs to strictly adhere to the cut-off time mentioned in the offer document. It said that no application should be accepted after the cut-off time.
