Sebi allows mutual funds to borrow intraday from clearing houses

Under the new framework, funds can borrow from clearing houses against collateral, with the loan repaid within the same trading day. The clearing corporation will set the terms, including the interest rate and eligible collateral types. Sebi said the facility is meant for genuine settlement mismatches, not for funding ongoing portfolio positions.

The move follows years of industry lobbying. The Association of Mutual Funds in India had repeatedly flagged the absence of an intraday credit line as a risk during periods of high redemption pressure. The new rule applies to all mutual funds registered with Sebi.

Clearing corporations will need to put in place systems to monitor and report intraday borrowing by each fund house. Sebi said it would review the framework after six months of operation.