SEBI modifies the provisions of valuation of money market and debt securities

Apr 24, 2020 | by Avantis RegTech Legal Research Team

Industry Specific Compliance

The Securities and Exchange Board of India (SEBI) on April 23, 2020, has reviewed the provisions of valuation of money market and debt securities under the SEBI (Mutual Funds) Regulations, 1996 due to the COVID-19 pandemic and moratorium permitted by RBI. The valuation agencies appointed by Association of Mutual Funds in India (AMFI) recognize default of security as per SEBI Circular dated September 24, 2019. RBI had permitted three-month moratorium or deferment on payment vide its Notification dated March 27, 2020.

Accordingly, if the valuation agencies appointed by AMFI are of the view that the delay in payment of interest or principal or extension of maturity of a security by the issuer has arisen solely due to COVID-19 pandemic lockdown or in light of the moratorium permitted by RBI creating temporary operational challenges in servicing debt, then valuation agencies may not consider the same as a default for the purpose of valuation of money market or debt securities held by Mutual Funds.

The above modification to our circular dated September 24, 2019 shall be in force till the period of moratorium by the RBI.

[SEBI Circular No. SEBI/HO/IMD/DF3/CIR/P/2020/70]


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