Sebi wants safety-first, contingency plans in place for MF investors

Regulator wants trustees to prepare report on complex exposures to promoter entities

The Securities and Exchange Board of India (Sebi) has shot a six-point letter to mutual funds (MFs) to ensure that unitholders’ interests are not getting compromised due to rise in ‘complex’ debt investments of MFs to promoter entities. 
 

The regulator has directed the MF trustees “to review the risk management policy of the MF including the aspects like cap on such exposure (exposure to promoter entities), adequate cover, legal risk, market risk, liquidity risk, etc, to ascertain that the interest of unitholders are protected at all points of time”. 

According to industry sources, Sebi also wants to assess if MFs