The money market mutual funds (MMMFs) are the mutual funds who exclusively invest in various money market instruments. The scheduled commercial banks and the general mutual funds or their subsidiaries engaged in funds management may set up MMMF either as Money Market Deposit Account or Money Market Mutual Funds with the permission of RBI. The private mutual funds which have floated separate Asset Management Company are under SEBI regulations if they deal in capital market instruments.
The resource mobilized by MMMFs is permitted to invest up to the maximum level in following money market instruments.
- In Treasury Bills and Dated Government Securities having unexpired maturity period up to one year: 25%
- Call/notice money: 30%
- Commercial Papers (exposure in the company should not be more than 3%): 15%
- Commercial Bills accepted/co-accepted by the banks: 20%
- Certificate of deposits: No limit
The MMMFs enable the individual investors to participate in the money market. The above limits are fixed with a view to ensuring safety and liquidity for the individual investors.