Sebi to relax norms for online MF investments

TheSecuritiesandExchangeBoardofIndiais consideringdoingawaywiththeRs. 50,000 yearlylimitperfundhouseforinvestingin mutualfundsthroughtheonlineroute. Additionally, KYCRegistrationAgenciesare workingondevelopingasystemtoaccept applicationsonlinewithouttheneedofa PANcard, saidasource.

Market regulator Securities and Exchange Board of India ( Sebi) is considering doing away with the yearly investment limit of Rs. 50,000 per fund house through the online route.

Also, KYC registration agencies ( KRAs) are developing asystem to accept applications online without the need of a PAN card, said a person aware of the development.

PAN is permanent account number — allotted by the income tax department. KYC is the process of a business verifying the identity of its clients.

According to Sebi guidelines released two months ago, investors can fulfil KYC norms online by using their Aadhaar card only. ( Aadhaar is an individual identification number issued by the Unique Identification Authority of India ( UIDAI) on behalf of the central government. This number serves as a proof of identity and address, anywhere in India.) But, the online KYC process at mutual fund houses is still based on PAN card details. Five KRAs are registered with Sebi at present.

"Aadhaar as a proof of residence fulfils all KYC requirements that we normally have.

Doing away with the limit for investment will ease entry of new investors to the sector and benefit all stakeholders," said Rajiv Shastri, chief executive, Peerless Mutual Fund.

The issue assumes significance since the lower House (or Lok Sabha) of parliament had passed the Aadhaar ( targeted delivery of financial and other subsidies, benefits, and services) Bill two months ago.

The Bill is aimed at better targeting of subsidies and identifying a person receiving asubsidy or service.

For online KYC through Aadhaar, the verification process is completed by entering aone- time password ( OTP) received on the investors mobile or e- mail address registered with UIDAI.

There are two conditions for online KYC which is based on Aadhaar. One, the amount invested should not exceed Rs. 50,000 per financial year per mutual fund. Two, the payment has to be through an electronic transfer from the investors bank account. " The information downloaded from UIDAI shall be considered as sufficient information for the purpose of KYC verification," said a Sebi circular in January.

"The removal of the Rs. 50,000 limit can be of great help from the point of view of extending the reach of mutual funds and increasing the sectors penetration into smaller towns," said the operations head of an asset management company, on the condition of anonymity. But he said that doing away with the limit, may not immediately translate into huge inflows.

Equity account addition for funds at 17- month low LOSING STEAM

The Rs. 14- lakh- crore domestic mutual fund sector has seen a sharp drop in equity account additions in April despite strong inflows. Compared to the monthly account addition of 360,000 in 2015- 16, the first month of the current financial year 2016- 17 saw the addition of only 158,000 accounts. This is the lowest monthly addition since December 2014.

The fall comes amid consolidation in the benchmark indices after a 10 per cent rally in March. The fall also comes after an addition of awhopping seven million equity accounts in the past two years.

The overall equity investors base has risen to 36 million now from 29 million in March 2014.

"Generally, April is a quiet month, as after saving taxes in March, investors take a pause. Further, there were several holidays reducing the number of working days. It is not a worrying signal as the underlying sentiment is strong and the number of investors coming to mutual funds will only rise," said D P Singh, executive director and chief marketing officer, domestic business, SBI Mutual Fund, Indias fifth- largest fund house.

In March, the sector was hit hard by higher redemptions (withdrawals) which forced fund managers to liquidate their holdings to the extent of over Rs. 10,000 crore. Sector officials had then said they were in a wait- and- watch mode to see whether this would lead to delayed termination or cancellation of equity accounts. Concerns that withdrawals might continue have subsided as April had strong inflows of nearly Rs. 4,500 crore in the equity segment, the most in the past five months.

Business Standard New Delhi,11th May 2016

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

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...

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

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...

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

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 ...

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