Mutual fund industry seeks urgent meet with Sebi on expense structure

Industry says if borrowing costs are adjusted in liquid schemes, their net asset value will get negatively affected

The mutual fund (MF) industry has sought a meeting with the Securities and Exchange Board of India (Sebi) at the earliest, while seeking clarification on the market regulator’s diktat that all scheme-related expenses should be booked in respective schemes.

For liquid schemes that are under the regulator’s scrutiny, the MF industry has asked it to consider allowing redemption-related borrowings costs to be borne in asset management companies’ (AMCs’) books.

Liquid schemes are typically used by large corporates and banks to park their cash. As redemptions from these investors are also often large in size, fund houses at times need to