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PPFAS MF has announced withdrawal of the temporary suspension of inflows into its flagship scheme, Parag Parikh Flexi Cap Fund from 15th March 2022. 

PPFAS MF had halted fresh inflows into the Parag Parikh Flexi Cap Fund which invests up to 35% of its corpus in foreign securities, with effect from February 2, 2022. That is, fresh lump sum investments and fresh registrations of SIPs and STPs into the scheme were stopped. Other AMCs with schemes having exposure to foreign securities too had followed suit. This came about after the Securities and Exchange Board of India (SEBI) advised AMCs to stop further investments in foreign securities to avoid breaching the industry-wide limit of $7 billion. 

According to a recent press release from PPFAS MF, since the AMC cannot remit further funds abroad till the time the limits are increased, all incremental investments will be in Indian stocks. While the AMC can continue to sell from its foreign stock holdings and buy some other foreign stocks, it cannot remit this money out starting February 2, 2022.

As per the AMC, it has remitted less than $725 million and has ample room for further foreign investments within the current per fund house limit of $1 billion. The AMC feels that conditions are conducive for the RBI to increase the limit for investments in overseas securities. The $7 billion limit was set in April of 2008 when the assets under management of the Indian mutual fund industry were around 5 lakh crores and India’s foreign exchange reserves were around $309 billion. Today these numbers are around 37 lakh crores and $634 billion respectively. With schemes investing overseas witnessing rapid inflows, the regulators had to step in preemptively to avoid a breach of the existing limit.

 

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