Debt mutual funds can now invest up to 15 per cent of their total net assets in housing finance companies with Sebi easing the regulations in this regard.
The norms have been relaxed as part of efforts to channelise more funds towards affordable housing activities.
Debt mutual funds were allowed to have an exposure of only up to 10 per cent to housing finance companies. This has been increased to 15 per cent with the immediate effect subject to certain conditions.
In a circular, Sebi said mutual funds would need to ensure that the additional exposure to the securities issued by HFCs have high investment grade rating. Besides, the entities should have been registered with the National Housing Bank (NHB).
According to the regulator, the guidelines for sectoral exposure in debt oriented mutual fund schemes put a limit of 25 per cent at the sector level and an additional exposure not exceeding 10 per cent (over and above the limit of 25 per cent) in financial services sector only to HFCs (Housing Finance Companies).
"In light of the role of HFCs especially in affordable housing and to further the government's goal under Pradhan Mantri Aawas Yojana (PMAY), it has now been decided to increase additional exposure limits provided for HFCs in financial services sector from 10 per cent to 15 per cent," Sebi said.
Earlier, debt mutual funds were allowed to invest an additional 5 per cent in housing finance companies, which was doubled in August last year.
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