SEBI Update - Intraday borrowing facility availed by mutual funds

SEBI has issued a circular dated July 10, 2026, permitting mutual funds to avail intraday borrowing facilities to address liquidity mismatches arising from differences in market settlement timings, pursuant to amendments made to the SEBI (Mutual Funds) Regulations, 2026. The facility may be used for unitholder payouts (including redemptions and IDCW), investment-related pay-ins, MTM obligations, foreign exchange settlements, and repayment of existing borrowings. The borrowing quantum is restricted to specified receivables and, additionally, may be used to meet redemption and other unitholder payout obligations. AMCs must ensure repayment of such borrowings by the end of the day, obtain approval of a Board-approved policy governing the facility, maintain scheme-wise records of liquidity mismatches, and comply with applicable regulatory provisions. Any cost or loss arising from intraday borrowing shall be borne by the AMC. The circular will come into effect from September 1, 2026.