New Delhi, March 13 -- The Securities and Exchange Board of India (Sebi) has removed the upper limit on intraday borrowing by mutual funds, allowing them to temporarily borrow beyond the earlier limit to manage same-day liquidity mismatches.

In a circular issued on Friday, the regulator clarified that mutual funds are generally allowed to borrow up to 20% of a scheme's net assets, with the duration of such borrowings not exceeding six months. This ceiling will now not apply to intraday borrowing carried out to meet redemption payouts. The change will come into effect on 1 April. It was introduced in a gazette notification for the new Sebi (Mutual Funds) Regulations, 2026, in January.

Mutual funds engage in intra-day borrowing to maintai...