Skip to main content

SEBI tells mutual funds to enforce Amfi guidelines

By
SEBI tells mutual funds to enforce Amfi guidelines
The Amfi guidelines also ask intermediaries to refrain from recommending inappropriate products
The Securities and Exchange Board of India has asked fund houses to follow the 'best practices' guidelines issued by the Association of Mutual Funds in India (Amfi).
It has reiterated the need for sticking to guidelines that stipulate a cap on payment of upfront commission to distributors. Issued by Amfi to take effect from April 2015, this had capped upfront commission at 100 basis points (bps).
“The regulator has said it is high time the industry players followed the guidelines in both letter and spirit,” said the chief executive of a fund house.To shore up assets in a rising market, funds resorted to high upfront commissions for distributors in the past financial year. The commissions paid for selling open-ended equity schemes went as high as 200 bps. Those for closed-end ones stood at 5 to 6 per cent, said experts.
The commission payout for distributors had dipped 22 per cent to Rs 36.6 billion in FY16 over the previous financial year, after the cap came into effect. However, in FY17, total payout rose 36 per cent to nearly Rs 49.9 bn. Those in FY18 are likely to be even higher. Sebi and Amfi have tried to make the sale of MF schemes more transparent in recent years. This was by mandating periodic commission disclosures and creating awareness about direct plans, which bypass distributors.
From October 2016, fund houses have to disclose the amount of commission paid to distributors in absolute terms, in the common account statement that goes to investors every six months. Direct plans were introduced in 2013 and now form nearly 40 per cent of sectoral assets.High upfront commissions have been particularly instrumental in driving up sales of closed-end schemes. After two years of lull, launch of these funds had gained in the past financial year. In FY18, such schemes collectively mopped Rs 503 billion, an 80 per cent increase over FY17, shows data from MF tracker Value Research.
The Amfi guidelines also ask intermediaries to refrain from recommending inappropriate products solelyof a higher commission. Intermediaries are also asked to avoid churning of portfolios or splitting of applications to earn higher commissions.MFs garnered a record high in assets over FY18, with monthly Systematic Investment Plans of Rs 50-60 billion. The total of assets was a little over Rs 23 trillion as of April, of which equity assets totalled about Rs 7 trillion.


The Business Standard, New Delhi, 02nd June 2018

Comments

Post a Comment

Popular posts from this blog

New income tax slab and rates for new tax regime FY 2023-24 (AY 2024-25) announced in Budget 2023

By
  Basic exemption limit has been hiked to Rs.3 lakh from Rs 2.5 currently under the new income tax regime in Budget 2023. Further, the income tax slabs in the new tax regime has been changed. According to the announcement, 5 income tax slabs will be there in FY 2023-24, from 6 income tax slabs currently. A rebate under Section 87A has been enhanced under the new tax regime; from the current income level of Rs.5 lakh to Rs.7 lakh. Thus, individuals opting for the new income tax regime and having an income up to Rs.7 lakh will not pay any taxes   The income tax slabs under the new income tax regime will now be as follows: Rs 0 to Rs 3 lakh - 0% tax rate Rs 3 lakh to 6 lakh - 5% Rs 6 lakh to 9 lakh - 10% Rs 9 lakh to Rs 12 lakh - 15% Rs 12 lakh to Rs 15 lakh - 20% Above Rs 15 lakh - 30%   The revised Income tax slabs under new tax regime for FY 2023-24 (AY 2024-25)   Income tax slabs under new tax regime Income tax rates under new tax regime O to Rs 3 lakh 0 Rs 3 lakh to Rs 6 lakh 5% Rs 6
Post a Comment
Read more

Jaitley plans to cut MSME tax rate to 25%

By
Income tax for companies with annual turnover up to ?50 crore has been reduced to 25% from 30% in order to make Micro, Small and Medium Enterprises (MSME) companies more viable and also to encourage firms to migrate to a company format. This move will benefit 96% or 6.67 lakh of the 6.94 lakh companies filing returns of lower taxation and make MSME sector more competitive as compared with large companies. However, bigger firms have shown their disappointment since the proposal for reducing tax rates was to make Indian firms competitive globally and it is the large firms that are competing globally. The Finance Minister foregone revenue estimate of Rs 7,200 crore per annum for this for this measure. Besides, the Finance Minister refrained from removing or reducing Minimum Alternate Tax (MAT), a popular demand from India Inc., but provided a higher period of 15 years for carry forward of future credit claims, instead of the existing 10-year period. “It is not practical to rem
1 comment
Read more

Don't forget to verify your income tax return in August: Here's the process

By
  An ITR return needs to be verified within 120 days of filing of tax return. Now that you have filed your income tax return, remember to verify it because your return filing process is not complete unless you do so. The CBDT has reduced the time limit of ITR verification to 30 days (from 120 days) from the date of return submission. The new rule is applicable for the returns filed online on or after 1st August 2022. E-verification is the most convenient and instant method for verifying your ITR. However, if you prefer not to e-verify, you have the option to verify it by sending a physical copy of the ITR-V. Taxpayers who filed returns by July 31, 2023 but forget to verify their tax returns, will get the following email from the tax department, as per ClearTax. If your ITR is not verified within 30 days of e-filing, it will be considered invalid, and may be liable to pay a Late Fee. Aadhaar OTP | EVC through bank account | EVC through Demat account | Sending duly signed ITR-V through s
Post a Comment
Read more