Sebi sets lower single-issuer limits for mutual fund debt schemes

Credit-risk rating based limits introduced for all new schemes; existing schemes to be grandfathered

The Securities and Exchange Board of India (Sebi) has introduced a credit-rating based single issuer limit for actively managed mutual fund schemes, potentially lowering the investment threshold in lower-rated papers.
 
Asset management companies (AMCs) have been directed not to invest more than 10 per cent of the scheme’s net asset value (NAV) in AAA-rated debt and money market securities from a single issuer. Schemes will have to limit their exposure at 8 per cent for AA-rated issuers while for instruments below A-rating, 6 per cent has been set as the threshold.
 
These limits will apply to schemes other