Mutual Fund News : SEBI permits graded exit load for liquid funds

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Acting on the proposal on graded exit loads made by the Association of Mutual Funds in India (AMFI) in a letter dated October 11, 2019 to the Securities and Exchange Board of India (SEBI), the regulator has finalized the graded exit load structure for liquid funds.

It has permitted mutual fund houses to levy graded exit load on investors of liquid funds to the extent of 7 days. Accordingly, the graded exit load will be applicable to investors who exit their holding in liquid scheme within 7 days. However, such loads will be reduced with the increase in number of holding days.

So, investors redeeming their units in liquid funds after holding for a day will have to pay higher exit load than the investors redeeming it on the sixth or seventh day.

SEBI has shared the following structures of exit loads via a letter to the AMFI.

Holding Period Exit load as a % of redemption proceeds
Day 1 0.0070%
Day 2 0.0065%
Day 3 0.0060%
Day 4 0.0055%
Day 5 0.0050%
Day 6 0.0045%
Day 7 onwards 0.0000%


The graded exit load will come into effect from October 19, 2019.

In its letter to AMFI, SEBI has asked the association to inform asset management companies about the new rules pertaining to graded exit load structures, who will in turn communicate the new structure to their respective investors.

While SEBI also mentioned that the load structure will be changed annually based on the interest rates in the system, no changes should be made in the exit load structure without consulting the regulator.

In an important announcement, SEBI has also set the cut off timing in liquid funds to 1.30 pm instead of 2 pm, with effect from October 21, 2019.