The Securities and Exchange Board of India (SEBI) on February 27, 2025, issued timelines for the deployment of funds collected by Asset Management Companies (AMCs) in New Fund Offer (NFO) as per asset allocation of the scheme.
It is stated that with an objective to encourage AMCs to collect only as much funds in NFOs as can be deployed in a reasonable period of time and to discourage any mis-selling of NFOs of the mutual fund schemes, certain amendments to SEBI (Mutual Funds) Regulations, 1996 were carried out and notified through the notification dated February 14, 2025. The said amendments shall be applicable from April 01, 2025.
It has been decided that the following shall be ensured in respect of deployment of funds collected by an AMC in an NFO:
• The AMC shall specify achievable timelines in the Scheme Information Document (SID) of a scheme regarding the deployment of the funds as per the specified asset allocation of the scheme and garner funds during the NFO accordingly.
• The AMC shall deploy the funds garnered in an NFO within 30 business days from the date of allotment of units.
• In an exceptional case, if the AMC is not able to deploy the funds in 30 business days, reasons in writing, including details of efforts taken to deploy the funds, shall be placed before the Investment Committee of the AMC.
• The Investment Committee may extend the timeline by 30 business days, while also making recommendations on how to ensure deployment within 30 business days going forward and monitoring the same.
• Trustees shall monitor the deployment of funds collected in NFO and take steps, as may be required, to ensure that the funds are deployed within a reasonable timeframe.
• The above provisions shall be applicable to all NFOs.
This circular shall come into effect from April 1, 2025.
[Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/23]
