Mumbai: The Securities and Exchange Board of India (Sebi) has suggested changes to its current rules, which could allow mutual fund companies and their subsidiaries to do more business. This includes offering more services like helping with pension schemes and promoting mutual fund plans overseas.
These changes are part of a consultation paper Sebi released on Monday. The market regulator has asked for public feedback on these ideas by July 28.
More Services for AMCs and Subsidiaries
Right now, Asset Management Companies (AMCs) and their subsidiaries can only manage and advise pooled funds. Sebi wants to expand this. One suggestion is to let AMC subsidiaries work as Points of Presence (POP) for pension schemes. This means they could help people invest in pension plans and get paid for doing so—something they can’t do under current rules.
However, Sebi made it clear that any new services must not harm mutual fund investors in any way.
Global Fund Distribution Allowed, But With Limits
Sebi also talked about allowing AMCs to promote and sell their mutual fund plans in other countries. But they can only sell direct plans, which don’t involve commissions. This selling would happen through their overseas subsidiaries.
They may also be allowed to sell other types of investment schemes (not mutual funds) that they manage or advise, again through their global branches, as long as they follow proper rules.
Serving Non-Broad Based Funds
Another big proposal is to relax the rule on "broad basing." Right now, pooled investment funds must have a wide range of investors. Sebi might let AMCs handle non-broad based funds—those with fewer investors—if strict controls are in place.
But this comes with risks, like:
- Unequal fees for different types of funds
- Use of shared resources in ways that hurt mutual fund investors
- Potential for unfair trading or insider information misuse
To prevent this, Sebi wants AMCs to:
- Use resources fairly based on the fees they earn
- Avoid charging mutual fund investors for services meant for other funds
(With PTI Inputs)
