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Instant MF redemptions:Sebi voices concern over liquidity mgmt

Press Trust of India  |  Mumbai 

The market regulator today expressed concern over the liquidity management by a few mutual fund houses which have started giving the investors the option of instant withdrawal from their liquid fund schemes.

Quite a few fund houses have started offering retail investors an option to withdraw upto Rs 2 lakh in a day. Investors who opt for this facility get the money in their accounts via the IMPS (immediate payment service) route.

Expressing apprehension over liquidity issues with this facility, Sebi's whole-time member G Mahalingam said, "I am talking about instant redemption, which looks convincing. But suppose if an investor clicks and money gets credited to his account, how much of liquidity demand can we manage?"

"These are the things we need to think. I am not closing out anything at all, I would request all of you to put your minds together and think on how can we take this concept forward without attracting any problems of financial stability and the industry stability," the newly-appointed official said here today after a launching a multimedia campaign by the industry body Amfi to increase investor awareness about MFs.

At present, fund houses like Reliance, ICICI Prudential, DSP BlackRock are offering instant redemption facility in their liquid funds.

Whereas Birla Sun Life launched an instant redemption facility under Cash Plus Fund a couple of weeks ago. launched the facility last July. Around 1 lakh instant redemptions have been processed at Reliance MF with value Rs 200 crore, the company said.

However, the fund houses feel that there is no need for any such concern on the topic.

"There is no need for concern, we have discussed this issue in MF advisory committee also and had discussions at too in past," Amfi chairman and chief executive of Birla SunLife MF A Balasubramanian said.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, March 15 2017. 21:57 IST