SEBI Finalises Exit Load Structure For Liquid Funds

SEBI Finalises Exit Load Structure For Liquid Funds

Rejig Exit Load Structure For Liquid Funds

On Tuesday, the market regulator Securities and Exchange Board of India has finalized the graded exit load structure on liquid funds. It has notified the exit load structure in a letter to AMFI. As of the data, on 11th October, the Association of Mutual Funds in India (AMFI) has submitted a proposal document about graded exit loads structure in liquid funds with SEBI. 

Exit Load Structure

As of SEBI’s letter to AMFI, the exit load has set for the first seven days. It has been fixed by 0.000% from day 7 onwards. The market regulator has reduced the exit load of 0.0005% points every day in all liquid funds. On the first day, the exit charge set at 0.0070%, 0.0065% on the second day, 0.0060% on day 3, 0.0055% on the fourth day, 0.0050% on the fifth day, and 0.0045% on day 6. It will effect from 20th October. 

It also mentioned in its letter that the exit load structure will change annually based on the interest rates of schemes.

Earlier, Sebi has mandated exit loads for liquid funds. The liquid funds charge exit load from investors who redeemed the fund within 7 days of investment.

According to the source, SEBI has already tightened norms for liquid funds. The market regulator stated that liquid funds will require to hold at least 20 percent in liquid assets like cash and cash equivalents. It also bands liquid funds from investing in short term deposits. Investors who made investments in liquid funds before the order date shall not pay any exit load to Mutual fund. 

After the SEBI’s approval, AMCs should communicate with their respective investors about the new structure of exit load. 

Note: Last but not least, no changes should be possible in the exit load structure without consulting Sebi, said in a letter. 

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