Page 29 - Banking Finance April 2025

ARTICLE

Mutual Funds : SEBI

Introduces Regulatory

Framework for

Specialized Investment

Funds (SIFs) Dr Rakesh Agarwal

Editor
Banking Finance

This framework seeks to fill gaps between mutual funds (MFs) and portfolio management services
(PMS), which allows sophisticated investors more flexibility with their investments while still being
held to regulations.

T he Securities and Exchange Board of India ("SEBI") experience managing Rs. 5,000 crores along with a
published a consultation paper on draft securities
fund manager having a minimum of three years of
market regulation for Specialized Investment Funds
("SIFTs"), with an expected effective date of April 1, 2025. experience managing Rs. 500 crores. As in Route 1, no
member of the sponsor or AMC should have taken
This framework seeks to fill gaps between mutual funds regulatory action during the last 3 years.
(MFs) and portfolio management services (PMS), which
allows sophisticated investors more flexibility with their Investment and Restrictions
investments while still being held to regulations.
The minimum investment in SIFs is Rs. 10 lakh per
investor, which has to be maintained on a PAN-wise
Eligibility Criteria for SIFs basis across all investment strategies. This limit is
A SEBI-registered mutual fund can set up a SIF by fulfilling applicable only for SIF investments and does not include
certain conditions via either of the two) routes: normal MF schemes of the same AMC. This requirement
Route 1: The USP of the mutual fund must be at least does not apply to accredited investors.
three years old in the market and an average AUM of
Systematic investment options such as Systematic
Rs. 10,000 crore in the last three years. Besides, over
Investment Plans (SIP), Systematic Withdrawal Plans
the last three years, no action on the regulatory front (SWP) and Systematic Transfer Plans (STP) are allowed
should have been initiated against the sponsor or asset as long as they meet the minimum investment
management company under the provisions of the SEBI
threshold.
Act.
Investment limits: Under SIF, an investment strategy
Route 2 (Alternate Route): AMC will have to appoint a can invest up to 20% of NAV in AAA-rated debt, 16% in
Chief Investment Officer (CIO) with 10 years of prior AA-rated debt, and 12% in A-rated and lower. It should

26 | 2025 | APRIL | BANKING FINANCE