Motilal Oswal
    NIFTY 50
Motilal Oswal

Sebi's new norms to discourage promoters from borrowing from MFs, says Kotak Mahindra AMC

Updated : June 28, 2019 11:01 AM IST

Markets regulator Sebi's new norms are likely to discourage promoters from raising funds from mutual fund house, therefore forcing them to rely on non-MF entities like NBFCs and others, said Lakshmi Iyer, CIO-Debt and head-Product, Kotak Mahindra AMC.

“If you look at total debt outstanding and the percentage of loan against shares as a proportion of that total debt, it was not a big amount. Incrementally, one has seen these loan against shares, the debenture book run down with the MF industry. Now with 4-time security cover needed, it will be detrimental for these promoters to borrow from MF and they will have to rely on non-MF entities like NBFCs or others to access this mode of investments," she said in an interview with CNBC-TV18.

The capital markets regulator Sebi on Thursday approved a new framework for issuance of differential voting right (DVR) shares from July and tightened norms for mutual funds and promoters pledge.

The regulator said liquid funds should hold a minimum of 20 percent of assets in cash, G-Secs, T-bills, repo. It slashed the sectoral cap to 20 percent from 25 percent. There should be adequate security cover of at least 4x in credit enhanced instruments linked to equities, the regulator added.
primo org
Have you signed up for Primo, our daily newsletter?
It has all the stories and data on the market, business, economy and tech that you need to know.
cnbc two logos
To keep watching CNBC-TV18, India's No. 1 English Business News Channel, call your Cable or DTH Operator and subscribe now for just Rs. 4 per month. You can also subscribe to CNBC-TV18 Prime HD for Re 1/- per month.Find out more
Live TV