SEBI puts cap on exposure to debt instruments by single issuer

SEBI has introduced host of caps on exposure to debt instruments by single issuers depending on their credit ratings. 

The market regulator clarified that active debt schemes can hold up to 10% of their NAVs in AAA rated securities issued by single issuer. Such limits were 8% and 6% for AA and A rated securities, respectively.

However, fund houses can extend their exposure to debt securities issued by single issuer irrespective of credit ratings by 2% after taking approval from their board of trustees and board of directors of AMC. This has to be within overall limit of 12%. 

Further, since there is no long-term rating available for money market instruments, AMCs can refer credit rating mapping of credit rating agencies and take the conservative long-term rating to take exposure. 

Further, exposure to money market securities issued by government like TREPS (Tri-Party Repo) on G-Sec and T bills will be considered as government securities. 
While the new schemes will have to comply with these norms immediately, existing schemes will be grandfathered from these guidelines till the maturity of underlying instruments.