March 25, 2026: Addendum to SEBI Circular on Borrowing by Mutual Funds

The circular issued by Securities and Exchange Board of India on March 25, 2026 serves as an addendum to its earlier guidelines on borrowing by mutual funds. It refers to a prior circular dated March 13, 2026, which established rules governing how mutual funds can borrow, including provisions incorporated into the SEBI Master Circular for Mutual Funds issued on March 20, 2026.

A key focus of the earlier circular was on intraday borrowings, outlined under clause 5.9.1 of the master circular. These guidelines were meant to regulate short-term borrowing activities within a single trading day by mutual funds, ensuring better risk management and operational discipline.

However, asset management companies (AMCs) raised operational challenges in implementing these intraday borrowing rules. In response, SEBI decided to defer the implementation timeline. The applicability of the intraday borrowing guidelines has now been postponed and will come into effect from July 15, 2026, giving stakeholders more time to adapt.

The circular is issued under SEBI’s statutory powers granted by the SEBI Act, 1992 and the Mutual Funds Regulations, 1996. Its overarching objective is to protect investor interests and ensure the orderly development and regulation of the securities market.