The Hindu Business Line : SEBI rejects ING Mutual loyalty bonus plan

THE Securities and Exchange Board of India has not approved ING Mutual Fund's proposal to present a loyalty bonus to elderly investors in its monthly income plan (MIP).

The proposal had formed part of the MIP's offer document that was initially filed with the regulator.

The latter did not agree to it, possibly because it embodied an assured return to a select set of unit holders.

The draft offer, in brief, related to the payment of loyalty bonus of one per cent of the face value of units held as on December 31, 2004, subject to certain terms and conditions.

Ms Kavita Hurry, CEO of ING MF, maintained that the regulatory agency did not clear the proposed benefit, which led to its withdrawal.

However, the final offer document does include the other additional feature - a savings bank account from ING Vysya Bank.

The loyalty bonus was payable to investors over 55 years (as on December 20 last year).

The draft offer document had stated that units should have been bought during the IPO period.

They had to be continuously held from the date of allotment till December 31, 2004.

The bonus, which was payable to the first named unit holder, was to be paid by the asset management company.

It was not charged to the scheme in question.

It may be mentioned here that SEBI has practically prohibited assured returns, a legacy that had spawned a lot of trouble for the asset management industry in the past.

A number of schemes promoted by various fund houses had to be bailed out by the authorities because they had guaranteed returns, ones that could not be delivered in the desired manner.

Some of these schemes were managed by the likes of UTI (in its earlier avatar) and GIC MF.

ING MF points out that investors subscribing to the IPO will still have the option to open a savings account with ING Vysya Bank without maintaining any minimum balance.

A number of other benefits are also being provided. These include - free personal accident insurance cover (Rs 3 lakh for three years), free annual accident hospitalisation cover (Rs 35,000 for three years) and a free debit card.

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