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SEBI Proposes Net Settlement of Funds for Mutual Funds to Reduce Liquidity Needs

Target:UPSC GS-IIIMPSCSSC GABankingTeachingPrelims HighMains MediumStatic GK Link
03 Sept 2026
~2 min
Source: The Hindu
Key Data:September 24, 2026
Bodies:SEBIAMFI
Practice MCQs from today's news ▸
What This Article Covers

1.SEBI proposes net settlement of funds for mutual fund schemes in cash market, securities to remain on gross basis.

2.Aim: Reduce temporary liquidity requirements and improve settlement efficiency for mutual funds.

3.Follows a similar net settlement framework already allowed for Foreign Portfolio Investors (FPIs).

The Big Picture
Prelims · HighMains · Medium

SEBI has proposed allowing mutual fund schemes to settle cash market transactions on a net basis for funds, while keeping securities settlement gross. This aims to reduce temporary liquidity pressures and operational inefficiencies, especially during index rebalancing or large redemptions, following a similar framework for FPIs.

Exam Lens

Quick Exam Facts From News

RegulatorSecurities and Exchange Board of India (SEBI)
ProposalNet settlement of funds for mutual fund cash market transactions
Settlement Basis (Securities)Gross (unchanged)
Comments DeadlineSeptember 24, 2026
Previous FrameworkNet settlement allowed for FPIs

1-Minute Revision

  • ›Regulator: Securities and Exchange Board of India (SEBI)
  • ›Proposal: Net settlement of funds for mutual fund cash market transactions
  • ›Target this Regulator: SEBI (Securities and Exchange Board of India)
  • ›Target this Proposal: Net settlement of funds for mutual funds in cash market
  • ›Target this Precedent: Similar framework already allowed for FPIs

Mastered this topic? Test your knowledge with a full MCQ quiz.

Practice exam-style questions, track your score, and strengthen your recall.

Q1Static LinkageEasy

Which regulatory body has proposed the net settlement of funds for mutual fund schemes in the cash market?

Q2Statement-basedHard

Consider the following statements regarding SEBI's proposal on net settlement for mutual funds:

1. The proposal allows net settlement of both funds and securities for mutual fund transactions in the cash market.

2. Net settlement of funds is permitted only at the level of an individual mutual fund scheme.

3. The proposal follows a similar framework already allowed for Foreign Portfolio Investors (FPIs).

Which of the statements given above is/are correct?

Q3Data-centricMedium

By what date has SEBI sought public comments on its proposal for net settlement of funds for mutual funds?

Q4Application/ImpactMedium

What is the primary objective of SEBI's proposal to allow net settlement of funds for mutual fund schemes?

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