PTI New Delhi

Markets regulator Sebi has allowed Investment Advisers (IAs) and Research Analysts (RAs) to use liquid mutual funds and overnight funds as an additional option to the bank fixed deposit to meet their deposit requirements.

This would provide IAs and RAs an additional option, along with bank fixed deposits, to comply with regulatory requirements and help in promoting ease of doing business.  Under the current rule, IAs and RAs are required to maintain a deposit with a scheduled bank. Such a deposit is required to be lien-marked to the Administration and Supervisory Body (ASB) for IAs and RAs. 

IAs and RAs, through their associations, have represented that they are facing certain operational difficulties in opening the FD accounts, such as non-uniform interpretation of third-party FD procedures across different bank branches and lien marking of the same in favour of ASB. They suggested that as an alternative to FD, units of a liquid mutual fund lien marked in favour of ASB may also be permitted.