SEBI Mandates Daily Monitoring and Auto-Redemption for Breach of Rs. 10 Lakh Minimum in Specialized Investment Funds [Read Circular]
SEBI mandated daily monitoring and automatic redemption for investors in Specialized Investment Funds falling below the ₹10 lakh minimum investment threshold
![SEBI Mandates Daily Monitoring and Auto-Redemption for Breach of Rs. 10 Lakh Minimum in Specialized Investment Funds [Read Circular]](https://images.taxscan.in/h-upload/2025/07/30/2070940-sebi-mandates-specialized-investment-funds-daily-monitoring-taxscan.webp "SEBI Mandates Daily Monitoring and Auto-Redemption for Breach of Rs. 10 Lakh Minimum in Specialized Investment Funds [Read Circular]")
The Securities and Exchange Board of India (SEBI) issued Circular dated July 29, 2025, to enforce stricter compliance with the Rs. 10 lakh minimum investment requirement for investors in Specialized Investment Funds (SIFs). This circular provides a detailed mechanism for how Asset Management Companies (AMCs), along with Registrars, Depositories, and Stock Exchanges, must monitor and...
The Securities and Exchange Board of India (SEBI) issued Circular dated July 29, 2025, to enforce stricter compliance with the Rs. 10 lakh minimum investment requirement for investors in Specialized Investment Funds (SIFs).
This circular provides a detailed mechanism for how Asset Management Companies (AMCs), along with Registrars, Depositories, and Stock Exchanges, must monitor and take action if an investor’s total investment in a SIF falls below the required threshold.
Key Provisions in This Circular
1. Daily Monitoring by AMCs
Asset Management Companies (AMCs) are required to monitor the Rs. 10 lakh minimum investment threshold daily and ensure no active breaches occur due to redemption or transfer by the investor.
2. If an Active Breach Occurs:
If an investor's total investment falls below Rs. 10 lakh due to redemption, sale, or transfer:
- All units held by the investor across all strategies under the SIF will be frozen (no debit allowed).
- The investor will get a 30-day notice to restore compliance.
3. Investor’s Response Options:
- If the investor rebalances within 30 days, their units are unfrozen, and no further action is taken.
- If the investor fails to rebalance, the units will be automatically redeemed at the NAV of the next business day after the 30-day notice period ends.
4. Definition – “Active Breach”
An active breach occurs when the total investment falls below Rs. 10 lakh due to any investor-initiated transaction, including redemption, transfer, sale, or exchange transactions. This applies across all investment strategies of the SIF.
Implementation Requirements
AMCs, RTAs (Registrar and Transfer Agents), and Depositories must:
- Set up systems and operational controls to monitor and enforce this rule.
- Ensure the circular is implemented from the date of issuance (July 29, 2025).
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