Overnight mutual funds are a type of debt mutual fund that invests in overnight securities — debt instruments with a maturity of just one day.
Currently, Investment Advisers (IAs) and Research Analysts (RAs) are mandated to maintain a specified deposit with a scheduled bank, marked as a lien in favour of the Investment Adviser Administration and Supervisory Body (IAASB) or the Research Analyst Administration and Supervisory Body (RAASB), as applicable.
Based on the representations from industry participants and feedback received during public consultations, Sebi’s board approved the proposal in its June 2025 meeting. The amendments to the Research Analysts rules and Investment Advisers norms were notified by the regulator on August 6-7, respectively.
According to the circular issued on Tuesday, Sebi said, “In order to ensure compliance with the deposit requirements under the norms, IAs and RAs will now maintain a deposit in the form of units of a liquid mutual fund or an overnight mutual fund or as a deposit maintained with a scheduled bank.”
Such a deposit will be marked as a lien in favour of IAASB or RAASB, as the case may be, it added. The investment advisers and research analysts are required to comply with the revised norms by September 30.
Leading stock exchange BSE, which functions as both IAASB and RAASB, has been directed to implement necessary systems and procedures for the implementation of the provisions of the new framework and bring the same to the notice of registered entities.
