Skip to main content

Sebi Proposes Regulatory Body for MF Product Distributors

The Securities and Exchange Board of India has proposed a self-regulatory body for distributors and advisors of mutual funds products. The regulator said the distributors of mutual fund products and investment advisers are becoming important players in the market and growing in number.  There are about 1.24 lakh distributors of mutual fund products as on February 28, 2019 and 1,136 investment advisers registered with Sebi as on March 19, 2019. “Therefore, their direct supervision by Sebi would be challenging. Hence, some form of a first-level regulator is required to have an oversight on them,” 
Sebi has stated in a discussion paper on Monday seeking public comments by April 21, 2019. “Further, the same (SRO) may be extended to suchother  intermediariesor other market participants as may be notified by Sebi from time to time.” The regulator has sought feedback on whether there should be a single or different SROs for different classes of regulatees and on enhancing the net worth of SROs from the existing ?1 crore. At present, asset management companies are responsible for the conduct of the distributors empaneled by it. But, there  are diverse practices in the industry regarding the relationships between the asset managementcompany and the distributor. Besides, a distributor is empaneled with multiple asset management companies.
The regulator said there is a need tobring in a certain levelof consistency in the practices,in theenforcement of the code of conduct and to take  disciplinary action, if required, for alleged malpractices like mis-selling of products,churning of portfolio and to deal with investor grievances. On  investment advisers, Sebi said it has received a large number of complaints alleging exorbitant fees, assurance of returns and misconduct. SROis an organisation representing a particular segment of entities,which, as a first-level regulator, regulates the members of that segment. The regulator has also proposed changes to the selection process of an SRO.
“As per the proposed process, instead of inviting applications, Sebi would recognise an entity as an SRO on a nomination basis, after conducting due diligence,” it said. Sebiwill alsoconstitute a nomination committee comprising externalexperts,whichwouldbeheaded by a retired judge of a high court or the supreme court to  consider and give recommendations regarding the suitability of an organisation or entity to be recognised as an SRO.
The Economic Times, 2nd April 2019


Popular posts from this blog

GST Refund of Rs 20,000 Cr Pending: Exporters’ Body

GST Refund of Rs  20,000 Cr Pending: Exporters’ Body Refund of over Rs 20,000 crore on account of Goods and Services Tax (GST) is pending with the government with more than half the amount stuck as input tax credit, Federation of Indian Export Organisations said on Tuesday. While claims over Rs7,000 crore were cleared in March, the amount was Rs 1,000 crore in April.However, after exporters’ request, the GST council and tax department are organizing a second phase of Special Refund Fortnight starting May 31, which will enable exporters to draw their refunds at a speedy pace. Many exporters have been unable to file the refund of input tax credit due to technical glitches, exports and claim happened in different months. The major challenge lies on ITC refund especially because the process is partly electronic and partly manual which is cumbersome and add to the transaction cost, the exporters’ body said. On IGST, refunds are getting delayed due to airline and shipping companies not submitt…

RBI rushes in to prop up falling rupee

RBI rushes in to prop up falling rupee India’s central bank reportedly intervened in the currency markets on Monday to prevent a further slide in the local unit, which breached the 67 mark to a dollar for the first time in 15 months amid a widening trade gap and runaway import bills fuelled by high crude-oil prices. Some state-owned banks were seen selling dollars aggressively, interventions that market dealers attributed to the central bank’s strategy to stem the decline of the Indian rupee against the US currency. The rupee is the worst performing among a dozen Asian monetary units in the past three months. It lost 4.25 per cent to the dollar during the period, show data from Bloomberg. On Monday, the Reserve Bank of India (RBI) is said to have sold about Rs 800 million collectively on the spot and exchange traded futures markets, dealers said. An email sent to RBI remained unanswered until the publication of this report. The currency market has seen such a strong central bank interven…

SC order on RBI circular: More options for banks to tackle defaulting firms

Lenders also have the option of restructuring the loans Lenders to companies which are under stress could now have three options to deal with them if they default on loans: take a haircut as part of a one-time settlement, restructure the loans for a longer tenure as they did when corporate debt restructuring schemes were allowed, or go to the Insolvency and Bankruptcy Code (IBC) for redress. These changes in the options available to lenders come, according to PE funds and bank lawyers who are involved in the IBC process, in the wake of the Supreme Court on Tuesday setting aside the 12 February RBI circular, which allowed a 180-day window to banks to resolve a company default.But they can still find a resolution. According to a Reserve Bank of India circular, a loan becomes a non-performing asset when banks cannot find a way of recovering their money in 90 days. In short, banks still have a window to resolve the default. Lenders can take a haircut as part of a one -time settlement of du…