Mumbai, May 15 -- The Securities and Exchange Board of India (SEBI) has issued a consultation paper on allowing mutual funds to use intraday borrowing lines for cash management.

The proposal aims to address liquidity gaps caused by differences in settlement timings for payouts and receivables.

The proposal follows representations from AMFI highlighting timing mismatches between payouts and receivables from entities such as the Government of India, RBI and CCIL.

SEBI had introduced a carve-out for intraday borrowings under the SEBI (Mutual Funds) Regulations, 2026, effective from 1 April 2026.

The regulator later prescribed safeguards through a circular dated 13 March 2026. These included board-approved borrowing policies, segregation ...