SEBI Delays Mutual Funds Intraday Borrowing Norms to July 15, 2026

The capital markets regulator has revised the timeline for implementing intraday borrowing norms for mutual funds, providing additional time for industry participants to prepare operationally.  

The move is part of a broader framework aimed at improving liquidity management while maintaining safeguards within the mutual fund ecosystem. 

Revised Timeline and Implementation Requirements 

The new framework for intraday borrowing will now come into effect from July 15, 2026. This replaces the earlier deadline of April 1, 2026, which had been outlined in a prior circular issued in March 2026. 

Before adopting the framework, asset management companies are required to establish internal systems and obtain board approval for policies governing such borrowing.  

This ensures that the operational, risk, and compliance structures are in place ahead of implementation. 

Framework for Borrowing and Permitted Usage 

The borrowing mechanism is intended strictly for short-term liquidity needs within mutual fund schemes. These include meeting redemption demands, handling payouts such as income distribution, and managing settlement-related obligations. 

Earlier guidelines issued in January 2026 had already outlined that equity-oriented index funds and exchange-traded funds can utilise borrowing for purposes such as unit redemptions, interest payments, distribution payouts, and trade settlements. 

Under the broader borrowing framework, such borrowings are capped at 20% of a scheme’s net assets and can be utilised for a maximum duration of 6 months. 

Intraday Borrowing Rules and Safeguards 

For intraday borrowing specifically, the standard 20% limit does not apply. However, such borrowing is tightly linked to receivables that are expected on the same day. This ensures that borrowing remains backed by near-certain inflows rather than open-ended leverage. 

These receivables may arise from instruments such as government securities, treasury-related transactions or settlements involving institutions like the Reserve Bank of India and the Clearing Corporation of India Limited. 

Additional safeguards have been introduced to ensure that the exposure remains controlled. Importantly, any costs or risks associated with intraday borrowing will be borne by the asset management company and not passed on to the mutual fund scheme. 

Read More: SEBI to Allow Mutual Funds to Continue Retirement and Children’s Schemes with Limits! 

Conclusion 

The revised timeline, combined with clearly defined borrowing limits and safeguards, reflects a calibrated approach to enhancing liquidity flexibility while preserving investor protection within mutual funds. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.  

Mutual Funds Investments are subject to market risks, read all the related documents carefully before investing.