"Easing Rules": SEBI Makes Merchant Bankers Optional For Buybacks & Relaxes Mutual Fund Borrowing

[00:00:01]Change is with respect to appointment of merchant banker.

[00:00:06]Earlier the there were several activities for which merchant banker was required. It was mandatory.

[00:00:14]This is being removed. Now, it will be optional at the discretion of the company for undertaking buyback of shares.

[00:00:23]Now, if the company decides not to appoint merchant banker, the activities undertaken by merchant bankers have been assigned to company compliance officer, statutory auditor, secretarial auditor, and stock exchanges.

[00:00:40]So, there is a very clear table will be provided so that if any company doesn't want to engage a merchant banker, it is very clear that then in that case, who will do what in respect of the uh buyback.

[00:00:58]So, there'll be no difficulty also for the company to go ahead in case they want not to engage merchant banker. It's will be up to them whether they want to do that or not.

[00:01:10]Now, these proposals have been deliberated in the primary market advisory committee and public consultation papers were issued.

[00:01:21]Uh in fact, there were two papers on this, April 2 and May 8.

[00:01:26]The approved amendments incorporate relevant feedback received from PMAC and through the public consultation process.

[00:01:38]The third decision relates to utilization of intraday borrowing by mutual funds.

[00:01:44]As you are aware, the board had approved the amendment to SEBI mutual fund regulations 2026.

[00:01:51]And there uh after that, there a circular was issued as required detailing the guidelines.

[00:02:01]However, the there was an issue with the industry that their cash management they could not really identify for the purposes for which only uh the purposes which were mentioned in that circular. So, there was consultation which was done and subsequently now it's been decided that intraday borrowings for various purposes including paying forex etc. will be available and uh quantum of now but they have to be squared up that it shall be responsibility of the AMCs that intraday borrowings are repaid by the end of the day and any intraday borrowing converted to overnight borrowing shall be within the regulatory limits of 20%. And for the purposes allowed in SEBI mutual fund regulations. So, there is both in terms of duration as well as in terms of extent of borrowing there is a regulatory limit. So, in case the intraday borrowings are not squared up the intraday borrowing requirement basically emanate from different paying and payout requirement the timing differences. So, there are cited receivables and there are other uh things also not necessarily redemptions only.

[00:03:24]And therefore, instead of making a very very restrictive use which was earlier permitted which would not have made their cash management uh easier.

[00:03:36]So, this is making things easier at the same time uh keeping the risk intact so therefore risk management intact so that there is no over leverage.

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