AMFI seeks review of decade-old $7 billion overseas MF investment cap
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- AMFI plans to approach the RBI, government, and Sebi to raise the $7 billion cumulative overseas investment limit for mutual funds — unchanged for over a decade — with CEO Venkat Chalasani saying the cap restricts global diversification
- Overseas ETFs face a separate $1 billion ceiling, and several fund houses have already stopped accepting fresh inflows or restricted subscriptions into international schemes after the industry-wide limit was exhausted
- The restriction gained urgency as US and Asian equity markets posted strong gains driven by AI-related stocks, which Indian mutual fund investors could not fully participate in due to the cap
- AMFI argues mutual fund investments differ from Liberalised Remittance Scheme outflows (capped at $250,000 per year) because money deployed through international schemes is eventually redeemed back into India, while LRS funds may remain abroad
- Equity mutual fund net inflows dropped 40% month-on-month to ₹22,908 crore in May from ₹38,440 crore in April amid volatility linked to West Asia geopolitical tensions, though Chalasani called the pullback normal investor caution
- India's mutual fund assets under management reached ₹81.58 lakh crore by end-May 2026, yet a 2025 Sebi investor survey found only 6.7% of households actually invest in mutual funds despite broader awareness
Why it matters: If the cap is raised, Indian mutual fund investors regain access to global equity rallies currently blocked by the decade-old $7 billion ceiling — several fund houses have already shut fresh flows into international schemes. AMFI's pitch hinges on rupee stabilisation and the FCNR(B) window closing, but with equity inflows already down 40% in May, the case for unlocking overseas exposure has become more urgent for an industry where just 6.7% of households invest.
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