NEWS
COLUMNISTS
STOCKS
MUTUAL FUNDS
TAX
INTERVIEW
REAL ESTATE
GOLD
CURRENCY

Thank you Mr. Jalan

Dhirendra Kumar

Reserve Bank of India in its Mid-term review of monetary and Credit policy for 1999-2000 has announced key changes to benefit money market mutual funds, quasi money market funds i.e the short-term debt funds and gilt funds.

Streamlined Regulations

Money Market Mutual Funds (MMFS) which exclusively invest in money market instruments are governed by the MMMF guidelines issued by the Reserve Bank of India. For sake of regulatory consistency with regard to investor protection MMGS will now be only under SEBI Regulations like other mutual funds. Henceforth, MMFs will come under the purview of SEBI Regulations, once SEBI Regulatory framework for MMFs is in place. However, banks and financial institiutions will have to seek Reserve Bank's permission before approaching SEBI for registration.

Cheque Writing

Gilt and Short-term debt fund have become more appealing with commercial banks being allowed to offer 'Cheque writing' facility to Gilt Funds and to those Liquid Income schemes of mutual funds. These funds predominantly invest in money market instruments (not less than 80 per cent of their corpus). This permission has been given subject to the same safeguards prescribed for Money Market Mutual Funds. These measures will significantly enhance the product appeal, as the transaction time in these funds will get drastically reduced.

Better Risk Management

Mutual Funds have now been permitted to undertake Forward Rate Agreements/Interest Rate Swaps. This will facilitate funds to hedge their own balance sheet risks. This will mainly benefit the closed-end guaranteed return funds.

Tell us what you think of this report