The Securities and Exchange Board of India (SEBI) has specified a transaction period (the period during which both subscription and redemption may be made to and from the scheme) and barred asset management companies from redemption and repurchase of units of all interval schemes and plans except during the specified period.
SEBI has fixed the minimum duration of an interval period in an interval scheme / plan at 15 days and the specified transaction period at a minimum 2 working days.
SEBI has also directed asset management companies to get all such schemes and plans listed in line with the changes in the SEBI (Mutual Funds) Regulations, 1996 regarding close-ended schemes.
Under current regulation, there is no restriction on tenure of securities in which interval scheme can invest. This read with daily redemption option may result in asset liability mismatch, SEBI said.
Currently, subscription to these schemes can be made during a specific period (known as specified transaction period) and repurchase of units is permitted on all business days subject to applicable loads (except for redemption during specified transaction period when no load is charged).
Investments will be permitted only in such securities, which mature on or before the opening of the immediately following specified transaction period.