SEBI clarifies that funds should not be deposited in STD of scheduled commercial banks by mutual funds

Aug 19, 2019 | by Avantis RegTech Legal Research Team


The Securities and Exchange Board of India (SEBI) on August 16, 2019, in order to protect the interests of investors in securities and to promote the development of, and to regulate the securities market, has issued a Circular with reference to the SEBI Circular SEBI/IMD/CIR No. 1/91171/07 dated April 16, 2007 pertaining to investment in Short Term Deposits (STDs) of scheduled commercial banks, pending deployment under the SEBI (Mutual Funds) Regulations, 1996.

SEBI has clarified that trustees or Asset Management Companies (AMCs) shall ensure that no funds of a scheme are deposited in STD of a bank which has invested in that scheme. The trustees or AMCs shall ensure the bank in which a scheme has STD do not invest in the said scheme until the scheme has STD with such bank.

[Circular No.: SEBI/HO/IMD/DF4/CIR/P/2019/093]


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