Market regulator on Thursday relaxed norms for debt mutual funds to invest an additional 10 per cent in housing finance companies. This would be over and above the current sectoral cap of 25 per cent.

In a circular, SEBI said the move is to help affordable housing project gets more funds.

Currently, debt mutual funds were allowed to invest an additional 5 per cent in housing finance companies.

The change takes with immediate effect, said SEBI circular.

Market regulator said mutual funds should ensure that the additional exposure to the securities issued by HFCs are rated AA (a high investment grade rating) and above and these HFCs are registered with National Housing Bank.

“In light of the role of HFCs especially in affordable housing space, it has now been decided to increase additional exposure limits provided for HFCs in financial services sector from 5 per cent to 10 per cent,” SEBI said.

The move assumes significance in the wake of the government's push for the low-cost housing sector.

Disclosure Voting

SEBI circular, issued by Harini Balaji, also said that henceforth, the voting pattern (on corporate actions of companies) by mututal funds should be certified by scrutinizer. At present, asset management companies are obtaining certificates from auditors.

“Board of AMCs and trustees of mutual funds shall be required to review and ensure that AMCs have voted on important decisions that may affect the interest of investors and the rationale recorded for vote decision is prudent and adequate. The confirmation to the same, along with any adverse comments made by the scrutinizer, shall have to be reported to SEBI in the half yearly trustee reports,” the circular said.

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