Markets regulator Securities and Exchange Board of India (Sebi) is set to hold its board meeting on Friday, where it is expected to consider a series of proposals aimed at enhancing market efficiency, including the reintroduction of open-market buybacks, faster approvals for Alternative Investment Fund (AIF) schemes and broader intraday borrowing flexibility for mutual funds, according to sources familiar with the developments.
One of the key proposals before the board involves bringing back open-market share buybacks through stock exchanges while significantly reducing the time required for their execution. Under the proposed framework, companies undertaking buybacks through the open-market route would be required to complete the process within 66 working days from the opening of the offer. This marks a substantial reduction from the earlier system, which permitted buybacks to remain open for as long as six months.
The regulator has also suggested retaining the existing requirement that companies utilise at least 40 per cent of the earmarked buyback amount during the first half of the offer period.
Friday's meeting will be the sixth board meeting chaired by Tuhin Kanta Pandey since he assumed office as Sebi Chairman on March 1, 2025. Apart from the buyback proposal, the board is also expected to approve a new green-channel mechanism known as GARUDA, which seeks to accelerate the launch of schemes by Alternative Investment Funds. The framework would enable eligible AIFs to begin fundraising within 10 working days of filing their placement memorandums, compared with the current waiting period of 30 days.
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GARUDA, short for Green-Channel: AIF Rollout Upon Document Acknowledgement, is designed to simplify and expedite the processing of placement memorandums (PPMs) submitted to Sebi, thereby facilitating faster capital mobilisation by investment funds.
The regulator's board is also likely to discuss a proposal that would allow mutual funds to use intraday borrowing facilities for a wider range of operational requirements beyond meeting redemption obligations. The move is intended to address cash-flow mismatches faced by asset management companies (AMCs) between outgoing payments and incoming receivables within individual schemes.
Currently, intraday borrowing is primarily used by mutual fund schemes as a liquidity management tool to meet redemption payouts and settlement obligations. However, the proposed changes would broaden its scope considerably.
Under the new framework, AMCs may be permitted to access intraday borrowing lines not only for investor redemptions and unitholder payouts but also for meeting trade settlement obligations, foreign exchange-related payments, mark-to-market requirements on derivative positions and repayment of existing borrowings. The proposed measures are part of Sebi's broader efforts to improve operational efficiency, streamline regulatory processes and strengthen the functioning of India's capital markets.
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