SEBI Major Reforms: The Securities and Exchange Board of India (SEBI) has made a big change in the rules of New Fund Offering (NFO). Now asset management companies (AMCs) will have to invest the entire amount raised through NFO within 30 days. This step has been taken to protect the interests of investors and bring transparency to the NFO market. This is to ensure that investors’ money is invested in the right place and at the right time.
Time limit fixed for investing NFO amount
Till now there was no fixed time limit for investing in NFO, that is, there was no obligation on AMCs to invest new fund amount. Now SEBI has made it clear that it will be mandatory to deploy the funds within 30 days. This is a big relief for investors, as now their money will be invested quickly.
If a fund house does not follow this rule, the investment committee can give an additional time of 30 days. This is to ensure that the fund house follows the rules.
New investments may be banned
If the funds are not invested on time, restrictions may be imposed on new investments. SEBI says that this step has been taken to protect the interests of investors so that their capital is used properly. This is an important measure to keep investors’ money safe.
Effort to stop misselling
SEBI has implemented this rule to prevent misselling in NFO and make fund collection real. This will prevent AMCs from raising funds without a solid plan and investors will get better protection. This is an important step to increase investor confidence.
When will the new rules come into effect
The new rules related to NFO will come into effect from April 1, 2025. This will bring more transparency to the NFO market and strengthen investor confidence. This will make the market more disciplined and accountable.
Will it affect your investment
If you are investing in a new fund offer (NFO), now you have to ensure that the fund house is investing your money in the right place within 30 days. This rule is being considered a major reform for the mutual fund industry.
Understand the strategy before investing in NFO
Before investing in any NFO, understand its strategy and investment plan thoroughly. Invest in NFO after April 1, 2025, keeping in mind the new rules. This move of SEBI is to assure investors of safe and transparent investment, which will increase discipline and accountability in the market.