SEBI Allows Use of Intraday Borrowing Facility for Mutual Funds from September 1

On Friday, SEBI extended the range of intraday borrowing by mutual funds, allowing asset management companies (AMCs) to utilize such facilities for a broader range of cash management requirements resulting from settlement timing mismatches, reports PTI.

The new framework, which takes effect on September 1, 2026, aims to guarantee more seamless investor rewards while protecting unit holder interests.

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The capital markets regulator stated in a circular issued on July 10 that the new framework will become effective on September 1, 2026, as said above. The decision follows revisions to the SEBI Master Circular for Mutual Funds, which were notified earlier this month and replaced the current borrowing standards under the SEBI (Mutual Funds) Regulations, 2026.

According to the regulator, the system was implemented to assist mutual funds in effectively managing short-term cash flow differences without bothering investors or interfering with settlement commitments.

(Disclaimer: Given the input is on an information basis, please seek professional advice.)