Important Facts of the News
- The notification is titled Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2025.
- The amendments take effect from the date they are published in the Official Gazette.
- Regulation 2(1)(ja) adds “units of Real Estate Investment Trust” in the definition involving equity derivatives.
- In Regulation 49(3), the minimum requirement changes from 95 percent to 97 percent.
- In Regulation 49AA(2), mutual fund investment limits now include a reference to up to fifteen percent of units of REITs issued by a single issuer.
- The explanation revises cross-holding limits between mutual funds and Specialized Investment Funds involving shares or REIT units.
- Instances of the words “of any company” are replaced with “of any entity” in relevant clauses to widen scope.
- Multiple references to REITs are modified or omitted in Chapter VI-C and Schedule VII clauses.
- Clause (b) of Regulation 52(6A) is removed.
- The amendments relate to investment exposure, cross-holding oversight, and terminology updates across regulations.
Overview of the Amendment
The Securities and Exchange Board of India has introduced updates to the existing Securities and Exchange Board of India (Mutual Funds) Regulations, 1996. These changes, notified as the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2025, come into effect once they are officially published in the Gazette.
Changes in Investment Definitions
A notable update appears in Regulation 2, where the definition related to equity derivatives is expanded. The term now additionally includes units of Real Estate Investment Trust. This aligns mutual fund frameworks more closely with the broader market of real estate investment-linked securities.
Revision of Minimum Investment Allocation
In Regulation 49, the minimum threshold under sub-regulation (3) is revised. The earlier figure of 95 percent is replaced with 97 percent, raising the proportion required to be invested in specified securities. This adjustment strengthens deployment discipline for funds that fall under this provision.
Refined Limits for REIT Exposure
Regulation 49AA introduces modifications related to investment concentration. The revised text permits up to fifteen percent of units of REITs issued by a single issuer to be held, depending on the scheme type. Additionally, the revised explanation ensures that if a mutual fund holds ten percent of either the voting capital of a company or REIT units of an issuer, then Specialized Investment Funds under all strategies together cannot exceed five percent exposure in the same entity or issuer.
Terminology and Structural Adjustments
The amendment updates phrases in relevant sections, replacing “of any company” with “of any entity.” This broadens applicability of investment and exposure rules across organizational structures. Furthermore, specific phrases referring to REITs are removed from certain clauses where necessary to streamline alignment between investment categories.
Updates in Schedule VII
Schedule VII also reflects parallel adjustments. Provisions now include a reference to unit holdings in REITs when calculating limits for paid-up capital exposure. Minor textual omissions in clauses involving REITs ensure consistency with updated definitions and limitations.
Regulatory Continuity
The updated regulations are built on the Mutual Funds regulatory framework first issued in December 1996, which has undergone multiple amendments over the years. The 2025 revisions continue the process of refining investment norms, ensuring oversight clarity and alignment with evolving market structures.
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SEBI Mutual Funds Amendment 2025
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SEBI Mutual Funds Amendment 2025 updates investment rules including REIT units and revised exposure limits. Read more at pessnews.in