MF industry safe, but Sebi will step in if self-regulation isn't strong: Madhabi Puri Buch

SEBI chairperson Madhabi Puri Buch

The mutual funds sector is considered "safe," according to Madhabi Puri Buch, the chairperson of the Securities and Exchange Board of India (Sebi). Expressing satisfaction at the progress that the MF industry has made so far and building a "solid foundation", she mentioned, in a veiled warning, that if the Association of Mutual Funds in India (AMFI) fails to adopt robust self-regulation measures, Sebi will step in to ensure investor protection.

That said, Buch commended AMFI for upholding high safety standards in the mutual funds industry. She was speaking at AMFI's new office at Mumbai's Bandra-Kurla complex, that she inaugurated today, where she addressed the Rs 40 trillion Indian mutual funds industry and media persons.

Buch emphasized that the mutual funds sector is built on strong foundations and that the issues observed during the COVID-19 period have been addressed. She expressed confidence in the industry's potential to expand from its current size of Rs 40 lakh crore to around Rs 100 lakh crore. However, she stressed the need for self-regulation within the industry to achieve this growth target. AMFI should establish an ethics committee to take action against individuals engaging in misconduct, even though it is not officially a self-regulatory organization (SRO).

The Sebi chairperson highlighted the importance of transparency as a core value in the mutual funds industry. "Transperency is this industry’s strong point," she said while emphasising that the industry focusses on upholding the spirit of the law. Buch said that the industry must prevent any individual from triggering regulatory intervention by ensuring ethical practices and promptly addressing wrongdoings. She encouraged AMFI to build a strong legacy based on doing what is right rather than what is easy.

Furthermore, Buch called on AMFI to concentrate on strengthening the sector's infrastructure and investing in technology. She noted that the mutual funds industry has not made significant advancements in core technology and suggested exploring better ways to utilize technology internally.

Overall, the Sebi chief expressed content at the regulatory standards that the MF industry were held up against when compared to peers. Additionally, her statements highlighted the importance of self-regulation, transparency, ethical practices, and technological advancements in the mutual funds industry.