To expand the reach of mutual funds in hinterland, market regulator Sebi today increased the cash transactions limit in such funds to Rs 50,000 from Rs 20,000.

The Securities and Exchange Board of India, (Sebi), in September 2012, had allowed fund houses to accept up to Rs 20,000 in cash per investor, per mutual fund in a financial year.

"It has been decided to increase the limit of cash transactions in mutual funds from the existing limit of Rs 20,000 per investor, per mutual fund, per financial year to Rs 50,000," Sebi said in a circular issued today.

These new limit is subject to compliance with the Prevention of Prevention of Money Laundering Act, 2002 (PMLA).

Along-with Money Market Mutual Fund (MMMF) schemes, Sebi said that transaction in liquid schemes would be exempted from being reported by employees of Asset Management Companies (AMCs) and Trustees of Mutual Funds to compliance officer within seven calendar days from the date of transaction.

According to Sebi, liquid schemes have emerged as a distinct category of mutual fund scheme having features similar to that offered by Money Market Mutual Fund schemes. (PTI)