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Cap on MFs' deposits with banks

Special Correspondent

MUMBAI: The Securities and Exchange and Board of India (SEBI) on Monday stipulated that no mutual fund scheme would be allowed to park more than 15 per cent of its net assets in short term deposits of all scheduled commercial banks put together.

However, it may be raised to 20 per cent with prior approval of the trustees.

Aggregate parking

Also, parking of funds in short term deposits of associate and sponsor scheduled commercial banks together should not exceed 20 per cent of total deployment by the mutual fund in short term deposits.

Further, no mutual fund scheme would be allowed to park more than 10 per cent of the net assets in short term deposits, with any one scheduled commercial bank including its subsidiaries. SEBI stated that `short term' for parking funds should be treated as a period not exceeding 91 days.

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