Actively looking at mutual fund re-categorisation says Sebi chief

Markets regulator Sebi on Monday said it is actively looking at re-categorisation of mid cap and small cap mutual fund schemes.

The move is expected to permit these products to invest in a wider set of stocks, according to industry experts.

In order to ensure uniformity in respect of the investment universe for equity schemes, the regulator, in 2017, had defined large cap, mid cap and small cap.

Top 100 companies in terms of market capitalisation come under the large cap segment, while the 101st to 250th firms falls under mid cap and 251st company onwards come under small cap.

"We are actively looking at re-categorisation of mutual funds and will come out with guidelines," Sebi chief Ajay Tyagi told reporters here after the board meeting.

It is expected that the regulator would ease framework to include more stocks under the small- and mid-cap category, experts added.

The Sebi's board approved a proposal to amend mutual fund regulations that will allow bank and non-bank custodians to offer custodian services for gold or gold related instruments such as gold ETFs.

The move is aimed at reducing concentration of custodial services for gold or related instruments, Sebi said.

In order to bring uniformity, the board has also decided to allow sponsor or asset management company (AMC) to invest in close-ended mutual fund schemes.

Presently, the investment by the sponsor or AMC is mandatory in all schemes, except closed-ended schemes.

Additionally, Sebi's board has approved amendment to depositories and participants regulations, wherein the word pledge will include re-pledging of securities for margin or settlement obligations of the client.

Further, the Securities and Exchange Board of India (Sebi) budget for 2020-21 has been approved in the meeting.