SEBI vide Circular No. EBI/HO/IMD/DF3/CIR/P/2020/22 dated 25th June, 2021 has specified norms regarding holding of liquid assets in open ended debt schemes & stress testing of open ended debt schemes.
i. This framework specified by AMFI(Association of Mutual Funds in India) shall come into force with effect from December 1, 2021, for all the existing open ended debt schemes (except Overnight Fund, Gilt Fund and Gilt Fund with 10 year constant duration) and schemes to be launched on or thereafter.
ii. However, mutual funds may at their discretion, choose to adopt the framework specified by AMFI before the effective date.
iii. For all regulatory limit calculations other than Asset Allocation Limits (e.g. for Macaulay Duration, Risk-o-meter, investment restrictions pertaining to issuer, sector and group), the base to be considered is 100% of Net Assets.
iv. For asset allocation limits (applicable for Banking and PSU Bond Fund, Floater Fund, Credit Risk Fund and Corporate Bond Funds scheme categories in terms of SEBI circular on ‘Categorization and Rationalization of Mutual Fund Schemes’) the base shall be considered as Net assets excluding the extent of minimum stipulated liquid assets i.e. 10%.