Skip to main content

Sebi cracks the whip on errant MFs

By
Securities and Exchange Board of India ( Sebi) on Wednesday sent an email to mutual fund houses seeking information on the commissions paid to distributors.
The market regulator has asked fund houses to give details about their commission payout by 3 pm on Thursday. “ We hear informally from Amfi ( Association of Mutual Funds in India) that certain asset management companies are not following the said guidelines ( best practices guidelines for rationalisation of distributor commissions). You are advised to provide the status with respect to the same. Your reply shall reach us by 3 pm tomorrow (Thursday),” said Sebi’s email.
The industry body of the mutual fund industry, Amfi, had issued guidelines under its best practices guidelines on March 26 and another lot on June 26, asking fund houses to rationalise fees that are being paid by them to distributors.
In the guidelines issued on March 26, fund houses were asked to limit the payment of commission to 100 basis points in the first year. It had also asked fund houses not to advance the trail commission — a popular move when closed- ended schemes were being launched in the past year and distributors were being paid four to six per cent as commission. The circular had also said that that the trail commission in the subsequent years should not be higher than the first year.
After the circular, there was a lot of debate within the sector with the smaller players saying that they were being short- changed and that larger players would benefit from the move. They argued that they needed to pay higher commission to incentivise distributors to push their products. Some fund houses even wrote to Amfi expressing their angst with the circular.
On June 26, Amfi issued another circular. In this, the industry association made a minor relaxation, allowing fund houses to pay upfront commission of one per cent on the systematic investment plans and systematic transfer plans in which retail investors participate.
Business Standard, New Delhi, 3rd Dec.2015

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more