Description

DSP Credit Risk Fund re-opens for subscriptions from January 01, 2026 with INR 10 crore cap per PAN and revised exit load structure of 3% for redemptions within 12 months.

Summary

DSP Mutual Fund has announced the re-opening of subscriptions for DSP Credit Risk Fund effective January 01, 2026, after a temporary suspension that began on December 16, 2021. The scheme will resume accepting fresh purchases, additional purchases, and systematic transactions subject to a maximum investment cap of INR 10 crore per PAN and a revised exit load structure that significantly increases penalties for early redemptions.

Key Points

  • Subscriptions into DSP Credit Risk Fund were suspended since December 16, 2021
  • Scheme re-opens for subscriptions from January 01, 2026
  • Total investment value per PAN capped at INR 10 crore (including existing investments and fresh inflows)
  • Exit load increased from 1% to 3% for redemptions within 12 months from allotment date
  • Previous provision allowing 10% redemption without exit load has been removed
  • No exit load for redemptions after 12 months from allotment date
  • Changes apply to all prospective investments including SIPs, STPs registered on or after January 01, 2026
  • Exemption applies to Designated Employees’ mandatory investments under SEBI alignment of interest requirements
  • No exit load for switches between Direct Plan and Regular Plan

Regulatory Changes

Exit Load Structure Changes:

Previous Structure:

  • Up to 10% redemption within 12 months: Nil exit load
  • Excess of 10% redemption within 12 months: 1% exit load
  • Redemptions after 12 months: Nil exit load

Revised Structure (Effective January 01, 2026):

  • All redemptions within 12 months: 3% exit load
  • Redemptions after 12 months: Nil exit load

Investment Cap:

  • Maximum investment of INR 10 crore per PAN across existing and fresh investments
  • Applies to all fresh purchases, additional purchases, Switch-ins, SIPs, and STP-ins

Compliance Requirements

  • Investors must ensure total holdings per PAN do not exceed INR 10 crore
  • AMC will enforce the investment cap for all prospective subscriptions
  • Unitholders should update PAN, KYC details, email address, mobile number, and nominee details with AMC
  • Unitholders must link their PAN with Aadhaar Number
  • Investors should review the Investor Charter on the Fund’s website
  • Check for any unclaimed redemptions or IDCW payments
  • SID and KIM of the scheme have been amended to reflect these changes

Important Dates

  • December 16, 2021: Original suspension of subscriptions began
  • December 26, 2025: Notice date for scheme re-opening
  • January 01, 2026: Effective date for resumption of subscriptions and implementation of new exit load structure

Impact Assessment

Investor Impact:

  • Existing investors can now make additional investments subject to the INR 10 crore cap
  • Significant deterrent for early exits with 3% exit load (tripled from 1%)
  • Removal of the 10% free redemption window increases cost for investors needing liquidity within 12 months
  • High net worth investors may be restricted by the INR 10 crore cap per PAN

Scheme Impact:

  • Investment cap helps AMC manage fund size and liquidity
  • Higher exit load promotes long-term investment behavior and reduces redemption pressure
  • Likely to improve portfolio stability and reduce forced selling of illiquid credit instruments

Market Impact:

  • Limited broader market impact as changes are scheme-specific
  • Sets precedent for other credit risk funds managing liquidity concerns
  • Reflects ongoing challenges in credit risk fund category post-2020 credit events

Impact Justification

Re-opening of a previously suspended mutual fund scheme affects existing and potential investors with significant changes to exit load structure (1% to 3%) and new investment caps, but impact is limited to DSP Credit Risk Fund unitholders