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Last Updated : Aug 28, 2019 10:02 AM IST | Source: Moneycontrol.com

SEBI says fault lines exposed in MF industry with slew of risky investments

SEBI constituted a working group with multiple stakeholders to suggest ways to simplify on boarding process for investors in mutual funds


Cracking a whip, SEBI Chairman Ajay Tyagi said the mutual fund industry had exposed its fault lines with several risky investments made for want of higher yields. It is high time for them to play as per the rule book and stop compromising on safety, he said.


Tyagi was speaking at the AMFI AGM 2019 held on August 27 in Mumbai.


He said that trustees needed to take immediate remedial steps and inform SEBI and not wait for the regulator to step in and take corrective measures.


A number of high-profile credit default cases including at IL&FS and DHFL groups have led to mutual funds bearing huge losses.


"Such instances do not reflect well on the industry practices. While SEBI stepped in and took several measures in the interest of the investors, the need for us to step in may not have arisen if many of these measures were taken by the industry itself," he said.


SEBI may also tighten existing asset valuation norms to protect investors from risks of capital erosion in debt-oriented mutual fund schemes.


To further ease the process of investing in mutual funds, SEBI constituted a working group with multiple stakeholders to suggest ways to simplify on boarding process for investors in mutual funds.


He said that the working group had submitted its report and the market regulator was in the process of implementing its recommendations.


Further, he pointed out that the government’s push for making investment easy in mutual funds through Aadhaar would help the MF industry grow.


Last week, Union Finance Minister Nirmala Sitharaman announced that Aadhaar-based KYC could be used to on board investors into mutual funds.


Tyagi said, “If we want more investors to be attracted to investments in mutual funds, the process of entry, exit and management of investments ought to be simple and easy.


“Recently, the Finance Minister announced that in order to improve market access for the domestic retail investors, Aadhaar-based KYC is to be permitted for opening of demat account and making investment in mutual funds. We will work with the Government on this with a view to operationalize the decision,” he added.



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First Published on Aug 28, 2019 09:28 am
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