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RETAIL FUNDS | Cesar Tordesillas, India

India relaxes mutual fund investment limits for housing finance

India's market regulator Sebi has relaxed the investment limit for such entities in debt mutual funds for housing finance companies.

“It has been decided that an additional exposure to financial services sector (over and above the existing 30 per cent) not exceeding 10 per cent of the net assets of the scheme in debt oriented mutual fund schemes will be allowed by way of increase in exposure to HFCs only,” said the Sebi.

According to the regulator, the decision has been taken after taking into consideration the important role played by housing finance companies in fulfilling the social objective of increased home ownership and supporting the economy by creating demand for construction of new homes.

In a circular last month, the Sebi had directed mutual funds to ensure that total exposure of their debt schemes in a particular sector shall not exceed 30 per cent of the net assets of the scheme.

However, the move had raised concerns of adversely impacting the funding costs for HFCs. 

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