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What SEBI restrictions on overseas investments by mutual funds means for investors, explained

AMCs shall not make any incremental investments in overseas funds or securities beyond what is existing as on February 1, 2022

January 31, 2022 / 04:44 PM IST

The Association of Mutual Funds in India (AMFI) has asked the mutual fund houses to stop accepting fresh lumpsum investments in schemes dedicated to investing in overseas stocks. The industry body has also asked the mutual funds to stop accepting fresh systematic investment mandates from the investors. This suspension will be applicable from Wednesday – February 2, 2022. This means, you can make your investments in these scheme, till the cut-off time (3 PM), February 1.

Why suspend fresh investments?

The capital market regulator, Securities & Exchange Board of India (SEBI) has set up a limit of US $1 billion per fund house and US$7 billion for the mutual fund industry. Also there is a separate limit of US $ 1 billion for mutual fund schemes investing in exchange traded funds listed overseas. Since the industry has almost reached this limit of US$7 billion, AMFI has issued this direction of not accepting fresh investments.

In a communication to the fund houses over the week, AMFI said: “AMCs shall not make any incremental investments in overseas funds or securities beyond what is existing as on February 1, 2022 at respective mutual fund level. In other words the total utilization of each AMC of the overseas limit shall be capped at the amount as of end of the day – February 1, 2022, in order to ensure compliance with the SEBI direction,” wrote AMFI.