Sebi Issues Guidelines for Intraday Borrowing by Mutual Funds Effective April 2026

The Securities and Exchange Board of India (Sebi) has issued new guidelines effective April 1, 2026, allowing mutual funds to undertake intraday borrowing from banks and financial institutions to manage temporary liquidity mismatches. Borrowing is permitted only for specific purposes such as redemption payouts, repurchase of units, and payment of interest or income distribution to unitholders. The borrowing amount cannot exceed guaranteed receivables expected on the same day. Asset management companies must have board-approved policies and bear any costs or risks arising from such borrowings. Equity-oriented index funds and ETFs may borrow for settlement of under-executed sell trades during closing auctions under specified conditions.