Sebi panel to study global practices to expand MF reach

Market regulator Sebi (Securities and Exchange Board of India)  has asked its mutual fund advisory panel to study regulatory provisions in international jurisdictions to suggest ways to channelise retail savings into MFs and submit a report in three-to-four months.

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 channelise 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 three-to-four 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 channelise 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.