The Securities and Exchange Board of India vide its notification dated 8th October 2020 has issued guidelines for inter-scheme transfer of securities in mutual funds that seek to tighten the norms relating to inter-scheme transfers.
In case of close-ended schemes, ISTs purchases would be allowed within “three” business days of allotment pursuant to New Fund Offer (NFO) and thereafter, no ISTs will be permitted and With regard to open-ended schemes, ISTs will be allowed for meeting liquidity requirement in a scheme in case of unanticipated redemption pressure and to rebalance the breach of regulatory limit.
The use of market borrowing before ISTs will be optional and Fund Manager may at his discretion take a decision on borrowing in the best interest of unitholders.
If security gets downgraded following ISTs, within a period of four months, the Fund Manager of the buying scheme has to provide detailed justification /rationale to the trustees for buying such security.
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