Allowing foreigners to buy MF units
SEBI is a busy bee. For one, the market regulator is working on fulfilling the finance minister's promise to allow foreign individuals to buy mutual fund units.
Finance Minister Pranab Mukherjee in his budget speech had announced, “It has been decided to permit SEBI registered Mutual Funds to accept subscripttions from foreign investors.” Mukherjee's words has the market regulator excited.
KN Vaidyanathan, ED, SEBI said, “This is a great step for Indian fund managers to compete with the global best to manage Indian allocation. So I am very excited.”
Less than two weeks after the announcement, SEBI has put the formulation of guidelines on such investments on the fast track.
Vaidyanathan said, “KYC today across the world the bar has been raised. So you need to make sure you don't dilute any of those controls while implementing. So we are in the process of working on that with RBI and the Ministry and hopefully soon we'll announce those guidelines.”
This is not the only thing keeping SEBI busy. It recently came out with a notification for fund houses to keep two different load balance accounts. In addition, SEBI has capped marketing expenses to one-third of the load balance on an annual basis, and allowed fund houses to use a part of it to pay distributors.
Added Vaidyanathan, “The rationale is standardisation. Balance in accounts prior to July 2009. We wanted to make sure across the industry everybody uses it in similar way and ensure that there is some kind of balance between older players and newer players.”
Experts say this is just a precursor to bigger changes that SEBI may instigate... all in the name of reviving the mutual fund industry.
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