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of <h1>Mutual fund borrowing for short-term liquidity limited to 20% of assets and six-month duration; loans banned, intraday exempt</h1> Regulation prescribes limits on borrowing and lending by mutual funds: mutual funds may borrow only to meet temporary liquidity needs for redemptions, repurchase, interest/IDCW payouts, or settlement of under-executed sell trades by equity index/ETF schemes, with such borrowing capped at 20% of the scheme's net assets and a maximum duration of six months; the operative effect is to restrict borrowing to short-term liquidity purposes and impose quantitative and temporal ceilings. Intraday borrowing is exempt from the 20% cap subject to SEBI-specified conditions, thereby permitting higher intraday leverage under specified terms. Mutual funds are prohibited from advancing loans for any purpose. Securities lending/borrowing may be undertaken in accordance with the Board's short-selling and SLB framework.
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