The SEBI has issued guidelines for setting up limited purpose clearing companies (LPCC) by asset management firms, making it compulsory for them to contribute toward the share capital of such entities. The LPCC is an entity set up to undertake the operation of clearing and settlement of repo transactions. The SEBI requires AMCs contribute INR 150 crore towards share capital of LPCC in proportion to the asset under management (AUM) of open-ended debt oriented mutual fund schemes managed by them.
However, the contribution shall be based on Average AUM of debt-oriented schemes. In this regard, AMFI shall calculate contribution per AMC based on the Average AUM Accordingly, it will be obligatory on the part of AMC(s) to contribute towards the share capital of LPCC. The regulator has specified that AMCs comply with net worth requirements and other conditions and timelines for setting up the LPCC.