The Securities and Exchange Board of India (Sebi) has approved in principle a plan to establish mutual funds dedicated to investing in securitization deals, in the hope that it will boost a market that has lots of potential issuers, but not enough investors. At present mutual funds are not allowed to invest in securitizations.

"Securitization is an area which Sebi wants to promote," said Sebi's chairman, D. R. Mehta. "We have had discussions with mutual funds and they are very keen to structure such products."

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