MF houses raise the bar on investment to curb mis-selling

In order to check mis-selling, mutual fund houses have taken a slew of steps, including raising the bar of investment for high-risk schemes to Rs 1 lakh from Rs 5,000. They have started calling up investors to know if they have understood the product well, with systemic investment plans (SIPs) taking the centre-stage. Usually, a minimum subscription of Rs 5,000 is required for investors to put in their money in MF schemes being run by companies.

However, Sundaram Mutual, a Chennai-based fund house, has increased the limit to Rs 1 lakh for its high-risk schemes. "We have made a minimum subscription of Rs 1 lakh in our high-risks schemes like infrastructure, entertainment, public sector enterprises and banks," newly-appointed Sundaram Mutual chief executive Sunil Subramaniam told PTI. "Also, we have set up a customer call-back centre at our office so as to resolve grievances of our customers relating to mis-selling," he added.

Axis Mutual Fund said it calls up its investors in case they have invested in long-term equity funds to tell them if they understood the product well at the time of putting in their money. Also, it has asked its distributors to go for risk profiling of such investors. "If you have got the right product, then there arises no question of mis-selling," Axis Mutual Fund Managing Director and Chief Executive Chandresh Nigam said.

He pitched for SIPs to avoid the menace of mis-selling. "I believe that there should be more and more SIPs as you can't mis-sell in the case of SIPs," Nigam added. "Mis-selling takes place for two reasons, which include risk profile and time horizon.

So, in the case of long-term equity funds, we call up each and every investor who have invested above a particular amount to know from them if they understood the product well. "Also, we encourage our distributors to go for risk profiling of investors," Nigam added.