Indian stock market regulator SEBI has ordered mutual funds to raise the minimum amount they hope to raise through new equity fund schemes as part of a crackdown on what it calls are 'casual fund launches'.
SEBI has asked Indian mutual fund houses to increase the minimum target amount mentioned in the fund prospectus to Rs 10 crore in case of equity schemes and Rs. 20 crore in other fund categories, up from nominal amounts of between Rs. 10 lakh and Rs. 1 crore now.
According to a senior SEBI official, "Changes in minimum target amount will prevent casual fund launches. Fund houses should launch schemes only if they are really serious about it. They should not launch a fund if they are not confident about collecting at least Rs 10 crore," said.
The SEBI has also asked fund houses that are awaiting approval to launch NFO's to revise the targeted amount figures and refile their prospectus.
Indian Fund houses that fail to collect the minimum amount specified in the prospectus would have to refund the money collected to investors. Refunds will need to be made within 6 weeks failing which fund houses will have to return the money along with 15% interest.
Indian mutual fund houses have mobilised about Rs 850 crore by launching 15 equity funds since January this (2011) year.
According to Valueresearchonline.com data, Mirae Asset Investment and Religare Mutual Fund have declared less than a crore of rupees as 'first declared AUM'. Only three funds, namely HSBC Brazil Fund, Union KBC Equity Fund and Sundaram Equity Plus which collected Rs 188 crore, Rs 166 crore and Rs 136 crore, respectively have managed to mobilise more than Rs 100 crore in the NFO.
SEBI has asked Indian mutual fund houses to increase the minimum target amount mentioned in the fund prospectus to Rs 10 crore in case of equity schemes and Rs. 20 crore in other fund categories, up from nominal amounts of between Rs. 10 lakh and Rs. 1 crore now.
According to a senior SEBI official, "Changes in minimum target amount will prevent casual fund launches. Fund houses should launch schemes only if they are really serious about it. They should not launch a fund if they are not confident about collecting at least Rs 10 crore," said.
The SEBI has also asked fund houses that are awaiting approval to launch NFO's to revise the targeted amount figures and refile their prospectus.
Indian Fund houses that fail to collect the minimum amount specified in the prospectus would have to refund the money collected to investors. Refunds will need to be made within 6 weeks failing which fund houses will have to return the money along with 15% interest.
Indian mutual fund houses have mobilised about Rs 850 crore by launching 15 equity funds since January this (2011) year.
According to Valueresearchonline.com data, Mirae Asset Investment and Religare Mutual Fund have declared less than a crore of rupees as 'first declared AUM'. Only three funds, namely HSBC Brazil Fund, Union KBC Equity Fund and Sundaram Equity Plus which collected Rs 188 crore, Rs 166 crore and Rs 136 crore, respectively have managed to mobilise more than Rs 100 crore in the NFO.
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