SEBI extends NFO period for Rajiv Gandhi equity scheme to 30 days

The Securities and Exchange Board of India has notified the regulations that will allow mutual funds to accept investors’ money in new plans under the Rajiv Gandhi Equity Savings Scheme (RGESS) for 30 days against a 15-day subscription period allowed for other schemes.

The relaxation has been made only for mutual fund schemes under RGESS, a government initiative aimed at attracting small investors into the capital market.

In a circular dated June 19, SEBI that the subscription period or the window for which a new fund offer (NFO) of a mutual fund scheme remains open has been extended to 30 days. Generally, an NFO remains open for a period of 15 days.

Besides, it said the timeframe for RGESS mutual funds allocating the refund money and issuance of statements by mutual fund houses would be 15 days from the closure of the initial subscription. The deadline remains at five days for other mutual fund schemes.

The notification comes into effect immediately.

Under the scheme, announced in the 2012-13 Union Budget, new investors putting in up to Rs 50,000 in the stock market and whose gross total annual income is less than or equal to Rs 10 lakh, can avail themselves of tax benefits.

The scheme encourages flow of savings into financial instruments and improves the depth of the domestic capital market. The scheme was notified by the Department of Revenue, Finance Ministry in November 2012, following which SEBI issued the guidelines.

As per the notification issued by SEBI on RGESS, there would be a lock-in period of one year on investments made under the scheme.

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