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Rupee Hardens On Low $-Demand

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The Securities and Exchange Board of India (Sebi) has turned down the suggestion of the Reserve Bank of India (RBI) to have a separate set of regulations for money market mutual funds (MMMFs). The two sides are meeting on Friday to discuss changes, if any, in the existing regulations _ including the contentious issue of a 15-day lock-in on investments by MMMFs.

Sebi is of the view that changes, if any, in the current regulations for money market mutual funds could be considered but there is no need for a completely new set of regulations.

RBI had recently handed over the regulation of MMMFs to Sebi, but had said that separate guidelines should be framed. The RBI guidelines, had among other things, put a 15-day lock-in on investments to ensure that MMMFs do not cannibalise bank deposits. Now, it is being considered whether this requirement needs to be continued with as the Sebi norms do not put such a restriction on even liquid funds, which invest a large part of their funds in money market instruments.

 

"We have told the RBI that at the moment there is no requirement to have a separate set of guidelines for MMMFs. We will discuss the issue with RBI on Friday," said Sebi executive director, Ashok Kacker.

Speaking at seminar on money markets organised here in Mumbai by the Bombay Chambers of Commerce and Industry, Kacker said that the handover of the regulatory control of the MMMFs from the central bank to Sebi, which had been announced by the former in the October credit policy had not yet taken place. "Discussions are on between the central bank and Sebi on various issues," he said.

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First Published: Jul 30 1999 | 12:00 AM IST

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