SEBI Chairman Mr. U K Sinha, who was Chennai to inaugurate the regulator’s southern regional office on Mount Road near IOB head office. He is worried about the lack of growth in penetration of MFs in the country.
The SEBI (Securities and Exchange Board of India) is set to come out with a multi-pronged strategy to enhance the reach of the mutual fund industry. The board has set up a panel for the purpose.
Mr U.K. Sinha, SEBI Chairman said, '“The exercise has just begun. SEBI is concerned at the reach of mutual funds is not up to its (SEBI's) expectations or the potential of the market."
In 2010-11, the net inflow in to the equity schemes of mutual funds was down by nearly Rs. 13,500 crore. But, in the following year, it turned positive with a net flow of about Rs. 700 crore. This is an encouraging development. But, the number of folios in the mutual fund industry has gone down in 2011-12. On the investor complaints, since June last year (2011), when SEBI launched computerised complaints registering system, there were about 35,000 complaints registered. More than two - third of this has been resolved within 30 days. The rest of them too will be sorted out very soon.
According to him, Above 50% of the complaints are against companies. Most of them are about not receiving dividends or annual reports.
The capital market regulator SEBI has expressed concern over the low penetration of mutual funds in India.
At a time when the domestic mutual fund industry is reeling under pressure and has continuously been losing investor confidence, several investor awareness programmes by fund houses and industry body Association of Mutual Funds in India (AMFI), have failed to attract investors.
Mr. Sinha also said,''No one has brought the issue of entry load. Profit booking leading to decline in MF folios. Investors should not be carried away by short term market developments. Equity markets are for long term perspective. SEBI is setting up ten regional offices in next 3 to 6 months. Which will not only clear proposals of IPO (initial public offerings) But, also will be delegated powers with respect to mutual funds. Which can clear proposals of IPOs of up to Rs. 500 crore.
According to the latest mutual fund industry folio numbers, penetration continues to be poor at less than 4%. Moreover, close to 3 - 4th of the fund industry’s assets come only from the country’s top 5 cities - Mumbai, Delhi, Bangalore, Chennai & Kolkata.
Mr. According to Sinha, people are trying to book profits, as a result of which folios are declining. On listing of insurance companies, Sinha said, “Issue & norms for listing life insurance companies are now clarified between SEBI & IRDA (Insurance Regulatory Development Authority), it won't take much time.Issues related to listing of non-life insurance companies are being discussed with IRDA”
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