MANU/SMFD/0002/2017

Ministry : Securities and Exchange Board of India

Department/Board : Investment Management Department

Circular No. : SEBI/HO/IMD/DF2/CIR/P/2017/14

Date : 22.02.2017

Notification/ Circulars Referred : Circular SEBI/HO/IMD/DF2/CIR/P/2016/68 dated August 10, 2016 MANU/SMIS/0003/2016

Citing Reference:
Circular SEBI/HO/IMD/DF2/CIR/P/2016/68 dated August 10, 2016 MANU/SMIS/0003/2016  Modified

All Mutual Funds/Asset Management Companies (AMCs)/
Trustee Companies/Boards of Trustees of Mutual Funds

Sir/ Madam,

Prudential limits in sector exposure for Housing Finance Companies (HFCs)

1. Presently, the guidelines for sectoral exposure in debt oriented mutual fund schemes put a limit of 25% at the sector level and an additional exposure not exceeding 10% (over and above the limit of 25%) in financial services sector only to HFCs. In light of the role of HFCs especially in affordable housing and to further the Government's goal under Pradhan Mantri Aawas Yojana (PMAY), it has now been decided to increase additional exposure limits provided for HFCs in financial services sector from 10% to 15%.

2. Therefore, in partial modification to SEBI circular SEBI/HO/IMD/DF2/CIR/P/2016/68 dated August 10, 2016, the para on sector exposure shall read as under:

"Mutual Funds/AMCs shall ensure that total exposure of debt schemes of mutual funds in a particular sector (excluding investments in Bank CDs, CBLO, G-Secs, TBills, short term deposits of Scheduled Commercial Banks and AAA rated securities issued by Public Financial Institutions and Public Sector Banks) shall not exceed 25% of the net assets of the scheme;

Provided that an additional exposure to financial services sector (over and above the limit of 25%) not exceeding 15% of the net assets of the scheme shall be allowed only by way of increase in exposure to Housing Finance Companies (HFCs);

Provided further that the additional exposure to such securities issued by HFCs are rated AA and above and these HFCs are registered with National Housing Bank (NHB) and the total inv........