Amendment in mutual fund rules, SEBI, Amendment in mutual fund rules, SEBI said – companies will have to invest money in schemes on risk basis

New Delhi : Capital market regulator SEBI has amended the mutual fund rules. Under this, mutual funds will be required to invest money in their schemes which will depend on the risk level. This initiative will ensure the skin in the game of the executives managing the company. This is important for better management of schemes and for investors.

As per the existing norms, investment is required to be 1 per cent of the amount raised through ‘New Fund Offering’ (NFO) or Rs 50 lakh, whichever is less. In a notification, the Securities and Exchange Board of India (SEBI) said that the asset management company shall invest in such schemes of mutual funds based on the risks associated with the schemes as may be prescribed by the Board from time to time.

However, the regulator has not fixed the minimum amount that a mutual fund would need to invest. According to market experts, mutual funds will need to invest a higher amount in riskier schemes like equities while lower amounts will need to be invested in low-risk investment schemes like bond funds.