SEBI allows mutual funds to net cash market fund settlements from April 2027

India's markets regulator SEBI on Thursday, 5 November 2026 permitted mutual fund schemes to net their fund obligations for outright purchase and sale transactions in the cash market, a move aimed at reducing temporary funding requirements and improving settlement efficiency. The facility, previously available only to foreign portfolio investors since 2026, will take effect from 1 April 2027.

Under the new framework, mutual funds can offset funds payable against funds receivable within the same scheme and settlement cycle. Netting will not be allowed across different schemes of the same fund. If a scheme buys and sells the same security in one settlement cycle, those transactions will not qualify for net settlement and will continue on a gross basis. Settlement of securities will remain gross, and non-outright transactions including derivatives and securities lending are excluded.

SEBI has asked the Association of Mutual Funds in India (AMFI) to formulate implementation standards in consultation with clearing corporations, stock exchanges, and custodians. Asset management companies and custodians must put in place systems for scheme-wise accounting and audit trails to prevent cross-scheme adjustments.

Update, 5 November 2026: The Hindu Business Line now also reports the story, confirming the same framework: net settlement from April 2027, no cross-scheme netting, and securities remaining on gross settlement. It adds that trustees must review implementation to protect unit holders' interests.