Sebi finalises graded exit load structures for liquid funds

The Securities and Exchange Board of India (Sebi) finalised the graded exit load structure on liquid funds on Tuesday. Sebi informed the structures of exit loads in a letter to the Association of Mutual Funds in India (AMFI). The proposal on graded exit loads was earlier made by Amfi in a letter to Sebi on October 11.

According to the letter that Sebi sent to Amfi, the graded exit load has been set at 0.0070% on redemption on day 1, 0.0065% on day 2, 0.0060% on day 3, 0.0055% on day 4, 0.0050% on day 5, 0.0045% on day 6 and 0.00% from day 7 onwards. Sebi also said that the load structure will be changed annually based on the interest rates in the system.

Earlier, Sebi had mandated liquid funds to introduce an exit load for investors who exit the fund within seven days. This directive was aimed at minimising the impact of frequent inflows and outflows by institutional investors. The movement of big money used to leave smaller investors vulnerable.

Sebi, in its letter also asked AMFI to inform the asset management companies about the new rules pertaining to graded exit load structures. Sebi has also asked the AMCs to communicate the new structure to their respective investors. The letter also says that no changes should be made in the exit load structure without consulting Sebi.


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