Sebi has allowed mutual funds to accept investor funds in new offers under the newly introduced Rajiv Gandhi Equity Savings Scheme (RGESS) for 30 days, as against a 15-day subscription period in other schemes.
The relaxation has been made only for mutual fund schemes under RGESS, a government initiative aimed at attracting small investors into the capital market.
"The maximum period for which initial offering of Mutual Fund scheme eligible under RGESS shall be open for subscription is extended from the existing stipulation of 15 days to 30 days," the Securities and Exchange Board of India (Sebi) said in a circular.
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Besides, Sebi said the timeframe for RGESS mutual funds allocating the refund money and issuance of statements by mutual fund houses would be 15 days from the closure of the initial subscription. The deadline remains at five days for other mutual fund schemes.
The circular comes into effect immediately.
Sebi further said,"maximum initial offer period, allotment of units, refunds of money and issuance of statement of accounts for Mutual Fund scheme eligible under RGESS would be suitably amended in due course."
Under the scheme, announced in the 2012-13 Union Budget, new investors can avail tax benefits who invest up to Rs 50,000 in the stock market and whose gross total annual income is less than or equal to Rs 10 lakh.
The scheme would encourage flow of savings in the financial instruments and improve the depth of the domestic capital market.
The scheme was notified by the Department of Revenue, Finance Ministry in November and following which Sebi issued the guidelines.
As per the notification issued by Sebi on the RGESS, there would be a lock-in period of one year on investments made under the scheme.
For transactions undertaken by investors through their RGESS designated demat account, depositories would be required to seek necessary transactional details from stock exchanges for enforcing lock-in.
Finance Minister P Chidambaram will launch the RGESS in Mumbai on February 9.