In a bid to make liquid funds safe and more liquid, the Securities and Exchange Board of India (Sebi) is considering a proposal that will direct the liquid fund investors to invest a fixed portion of their assets in government securities with the market regulator, reported Mint quoting sources.

The proposal, that fund managers fear will impact returns and reduce flexibility, is under the consideration of a mutual fund advisory committee (MFAC) of Sebi, the report said.

“A sub-committee under the mutual fund advisory committee (MFAC) is currently working on devising the norms for a liquidity buffer for all liquid funds. It could be as high as 19 percent of the assets," a person close to the development was quoted as saying in the report.

The Sebi proposal would be similar to the statutory liquidity ratio (SLR) requirement on banks which requires the lenders to keep a certain percent of the money in form of government bonds, the daily said.

First Published:Jun 6, 2019 10:39 AM IST