The Securities and Exchange Board of India (SEBI) has introduced a framework allowing net settlement of funds for outright cash market transactions by mutual fund schemes, effective April 1, 2027. Under existing rules, transactions by institutional investors are required to be delivery-backed and settled on a gross basis.
The regulator stated that netting of funds will be permitted only at the level of an individual mutual fund scheme within the same settlement cycle. No netting of funds or adjustment of obligations will be allowed across different schemes of the same fund house. Meanwhile, the settlement of securities will continue to be conducted on a gross basis between the scheme and its custodian.
SEBI defined an outright transaction as either a buy or sell trade in a security during a settlement cycle, but not both. Trades involving both purchase and sale of the same security within a cycle will remain non-outright and require gross fund settlement. Derivative trades, short sales, and securities lending and borrowing are excluded from the framework.
What it means
- AMFI will prepare implementation standards in consultation with stock exchanges, clearing corporations, and custodians.
Source
Securities and Exchange Board of India, “Framework for net settlement of funds for transactions undertaken by mutual fund schemes in cash market” dated 5 November 2026. Read the original release (PDF).
Summary of an official release for general information only. Not investment advice. Read the original source before acting on any information.
Official RBI, SEBI, Government and Defence updates as they happen.
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