SEBI, RBI make way for more off-shore Mutual Funds

PFW Bureau / Sep 27

Both regulators Securities and Exchange Board of India (SEBI) and Reserve Bank of India (RBI) have further liberalised Mutual Fund (MF) investments in the overseas market. The aggregate ceiling for overseas investments by mutual funds (MF) has been enhanced from US$ 4 billion to US$ 5 billion.
Similarly, the limit for overseas investments of the individual fund house has been increased from US $ 200 million to US $ 300 million.

RBI said in a statement that it has been decided to accelerate the implementation of the third phase of the recommendations of the Committee on Fuller Capital Account Convertibility (CFCAC) with regard to the foreign exchange outflows after consulting with the Union government and keeping the current macro economic situation. “Accordingly, the following measures are being implemented with immediate effect”, the statement said.
In line with RBI, SEBI too has enhanced the limit for the overseas investments of the individual fund house from US $ 200 million to US $ 300 million.

SEBI issued a circular stating that the total ceiling of the MFs investments in the overseas market has been increased from US $ 4 billion to US $ 5 billion.  “The sub-ceiling linked to the net assets of an asset management Company (AMC) as on March 31 of each year has also been dispensed with", the circular said.

According to the market players, this decision of the apex bank would encourage fund houses to offer more offshore funds to the investors. Birla Sun Life Mutual Fund, Tata Mutual Fund and Franklin Templeton Mutual Fund have already introduced offshore mutual funds. And, several other funds houses have lined up to offer offshore funds.

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