SEBI is likely to increase instant withdrawal limit in overnight funds and liquid funds to Rs.2 lakh, said two industry officials familiar with the development.
“The Mutual Fund Advisory Committee (MFAC) of SEBI recommended the regulator to review the existing instant withdrawal limit in overnight and liquid funds and increase it from Rs.50,000 to Rs.2 lakh. The idea is to replace the savings bank account with liquid/overnight funds so that investors can get better risk adjusted returns post taxation,” said one of the officials quoted above.
In 2017, SEBI allowed fund houses to provide instant redemption in liquid funds and eventually in overnight funds. However, the market regulator has put a limit of Rs50,000 or 90% of folio value, whichever is lower on such redemptions.
Fund houses can extend this facility to individual investors only, i.e., retail investors and HNIs.
