Sebi allows segregation of distressed assets by mutual funds

Provision will be optional for schemes taking credit risks in their debt exposures

The liquidity crisis triggered by the IL&FS default has led the Securities and Exchange Board of India (Sebi) to introduce the concept of segregated portfolio – a mechanism to separate distressed assets from the liquid part of a mutual fund scheme. This provision will be optional for the schemes taking credits risks in their various debt exposures.

“This provision has been triggered by the crisis at non-banking finance company (NBFCs). So, it is for the interest of retail investors that the toxic assets are segregated from the assets which are doing well. We think it is an appropriate time to