SEBI panel to study global practices to expand MF reach

MDT/PTI 17 September 2012

Taking note of retail MF assets accounting for as high as 74% of GDP in the US and 42% in the UK, the Indian market regulator asked its mutual fund advisory panel to study regulatory provisions in international jurisdictions to suggest ways to channelize retail savings into MFs

New Delhi: Market regulator Securities and Exchange Board of India (SEBI) has asked its mutual fund (MF) advisory panel to study regulatory provisions in international jurisdictions to suggest ways to channelize retail savings into MFs and submit a report in next three-four months, reports PTI.

Taking note of retail MF assets accounting for as high as 74% of GDP in the US and 42% in the UK, the MF Advisory Committee (MFAC) of the SEBI, has pitched for a need to undertake various long-term and short-term measures to boost MF investment flow.

It has been recommended by MFAC that long term measures will be required to channelize the retail savings in a major way into investments in mutual fund schemes.

SEBI is of the view that further focused deliberations need to be undertaken by the MFAC for this purpose, regulatory officials said.

Consequently, SEBI has proposed that MFAC undertake study of regulatory provisions prevalent in the international jurisdictions and submit their recommendations by way of a report within a time frame of 3-4 months.

SEBI would provide all the required assistance to MFAC in this matter.

SEBI Chairman UK Sinha has recently stressed on the need to expand the reach of mutual funds, while Finance Minister P Chidambaram has also said that steps were required to channelize household savings into products like MFs, rather than in gold.

At its board meeting last month, SEBI had asked MFAC to develop a long-term policy paper on mutual funds after wider consultation with all the stakeholders.

The paper is expected to deal with policy objectives, measures to augment the financial inclusion objectives by increasing penetration of the industry, obligations on the industry and other stakeholders, tax and other measures to help in the growth of the industry.

Some of the long-term measures have already been proposed for mobilisation of household savings into MFs. It has also been felt that there are separate policies and regulatory framework for various sectors such as insurance, pension, portfolio management, telecom and even venture capital funds.

But, no such policies exist for the Mutual Fund industry.

MFAC, which comprises of members from the industry and other experts, is mandated to advise SEBI on matters relating to regulation and development of MF industry, their disclosure requirements and investor protection measures.

Besides, it also advises SEBI on measures required to be taken for change in the legal framework to introduce simplification and transparency in the MF regulations.

Comments

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Nilesh KAMERKAR

1 decade ago

Finally the truth has prevailed, if this is not an acknowledgment of failure, then what is it?
Like the blind men trying to figure out an elephant, we too lost sight of the bigger and whole picture.

One way of reviving the mutual fund industry is by weeding out the unnecessary complications that have been created in the last 5 years under the pretense of low-cost operations, ‘investor protection’ and additional transparency.

The MF industry was doing just fine till 2007 -2008; if we undo only ‘those’ measures which have not worked or rather have proven to be counter productive, it shall be good enough. (But . . . then nobody gets to travel abroad on tax payer’s money)

What is required is large doses of commonsenseâ€¦ any amount of foreign travel cannot guarantee that.

Hope, they do not come up with the ‘Simple’ idea of now hiring retired teachers and retired bankers abroad for selling mutual funds in India.