Sebi raises debt MFs' exposure limit for housing finance firms

Relaxing its norms, regulator Sebi today allowed debt mutual funds to invest an additional 10 per cent in housing finance companies, over and above the sectoral cap of 25 per cent to help affordable housing space get more funds.
So far, debt mutual funds were allowed to invest an additional 5 per cent in housing finance companies, which has now been doubled with the immediate effect.
In a circular, Sebi said mutual funds would need to ensure that the additional exposure to the securities issued by HFCs are rated AA (a high investment grade rating) and above and these HFCs are registered with National Housing Bank (NHB).

"Presently, the guidelines for sectoral exposure in debt oriented mutual fund schemes put a limit of 25 per cent at the sector level and an additional exposure not exceeding 5 per cent (over and above the limit of 25 per cent) in financial services sector only to HFCs.
"In light of the role of HFCs especially in affordable housing space, it has now been decided to increase additional exposure limits provided for HFCs in financial services sector from 5 per cent to 10 per cent," Sebi said.
The move assumes significance in the wake of the government's push for the low-cost housing sector.