Trusts in Maharashtra Permitted to Invest Up to 50% in Mutual Funds

Effective July 21, 2025, public trusts in Maharashtra have been granted permission to invest as much as 50% of their corpus in mutual funds and other specified securities. This reform is a major shift from earlier policies that only allowed investments in fixed deposits and post office schemes unless special permissions were sought.

Key Changes in Investment Norms for Public Trusts

The Charity Commissioner of Maharashtra has issued a general order enabling trusts to diversify their portfolios without applying for individual investment permissions. The updated directive covers a broad range of instruments, including mutual funds and government securities, thereby modernising trust fund management in the state.

New Eligible Investment Instruments

Public trusts can now allocate up to 50% of their funds into options like mutual funds with 65% equity exposure, debt mutual funds regulated by SEBI, ETFs tracking key indices like BSE Sensex or NSE Nifty, as well as government and corporate debt securities with a minimum 3-year maturity. Additionally, investments in shares of companies with a market capitalisation of ₹5,000 crore or more are now permitted.

Conditions on Security Ratings

The eligible securities must be rated AA or above by at least two SEBI-registered credit rating agencies. If more than two ratings are available, the two lowest ratings will be taken into account. This ensures that trusts remain exposed to instruments carrying lower credit risk.

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Benefits of the New Order

This regulatory move aims to ease administrative hurdles for trustees and allow better capital appreciation. By accessing market-linked instruments alongside traditional options, trusts can optimise returns while staying within well-defined compliance limits.

Conclusion

The revised investment policy represents a turning point for public trusts in Maharashtra, allowing them greater flexibility and access to diversified asset classes. With a 50% investment cap, trusts can now pursue balanced strategies aligned with safety and growth objectives.

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or 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 Fund Investments are subject to market risks. Read all related documents carefully before investing.