A circular issued by market regulator Securities and Exchange Board of India (Sebi) in November, mandating all debt mutual funds to hold 10% of their assets in cash, has led to confusion in the mutual fund industry. The rule came into effect on 1 February, 2021.
According to a senior debt fund manager who declined to be named, it was unclear how the 10% will be calculated for those with specific mandates such as banking and PSU debt funds, credit risk funds, and corporate bond funds.
