Markets regulator clamps down on inter-scheme transfers for mutual funds

Sebi's intention is to protect investors, but flexibility has been taken away now, says fund official

The Securities and Exchange Board of India (Sebi) on Thursday tightened norms on inter-scheme transfers (ISTs) for mutual funds (MFs), imposing conditions on when the facility can be used and placing greater accountability on fund managers deciding on such transfers.

ISTs involve a scheme buying or selling a debt instrument from another scheme of the same fund house. The practice can create conflicts related to valuation, a matter that Sebi has flagged earlier.

ISTs for close-ended schemes will only be allowed within three business days of the new fund offer. Earlier, such transfers could be done any time as long