SEBI proposes new tier-2 framework for small-cap mutual funds
Regulator targets liquidity standards and stress-test disclosures across the smallcap and midcap universe.
The Securities and Exchange Board of India (SEBI) on Thursday floated a consultation paper proposing a tier-2 framework for the small-cap mutual fund category — a move that will reshape how India's 44 AMCs report liquidity, concentration and stress posture every quarter.
Under the draft, AMCs running schemes above ₹10,000 crore in the smallcap and midcap categories will be required to publish a single-page liquidity card alongside the fund factsheet, summarising the percentage of AUM that can be liquidated within seven trading days at 80% of last-traded prices.
For distributors, the implications are practical: the new disclosures will need to be folded into every quarterly review deck. "We will need to retrain our paraplanners," said Neha Verma of FinHive Advisors. "Clients in tier-2 cities ask very basic questions and the new card will give them a much cleaner answer."
The paper also recommends a mandatory stress-test summary visible at the top of the scheme information document — a long-standing ask from the MFD community that the regulator now appears willing to codify.
Industry feedback is open until July 31. AMFI is expected to coordinate a unified industry response by July 20.