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Mumbai, April 3 The Securities Exchange and Board of India (SEBI) has reduced by a fourth of the fees charged to merchant bankers in case of public issues from Rs 10 crore up to Rs 5,000 crore. Hitherto, issues of such size were charged a fee of 0.1 per cent of the amount raised. But that is now restricted to 0.025 per cent. There is a similar reduction in the case of public issues above Rs 5,000 crore as well.

In the case of rights issues in excess of Rs 500 crore, the fees are down to Rs 5 lakh from the earlier Rs 25 lakh. However, in the case of buy-back of shares by companies involving significant sums of money, the fee structure has been substantially increased. For instance in buy-backs involving Rs 500 crore, the fees earlier were only Rs 5 lakh. That is now revised to 0.125 per cent of the sum involved, which translates in this case (Rs 500 crore) to Rs 62.5 lakh.

The SEBI had, at the conclusion of its last board meeting, indicated that it had decided to reduce the fee structure for various fund mobilisation activities.

To encourage overseas investments, the Reserve Bank of India has raised the limit for overseas investments by Indian mutual funds from $5 billion to $7 billion with immediate effect.

The investments would be subject to the SEBI regulations, RBI said in a release on Thursday.

“The RBI move signals its continued confidence in the country’s forex reserves and the direction towards the capital account convertibility,” said Mr Krishnamurthy Vijayan, Whole-time Director & Chief Executive Officer, JP Morgan Asset Management India Pvt Ltd.

“The RBI measure is a clear indication that forex limit is not a constraint for launch of more global funds,” said Mr A.P. Kurian, Chairman, Association of Mutual Funds in India. “Currently there are around 17 schemes that invest across the globe,” he added.

According to analysts, though RBI has been allowing more investments, mutual funds have yet to take advantage of it. The data provided by Value Research show that the overseas investment by mutual funds is less than $1 billion as on February 29.

“So far, we have not even crossed one-fifth of the limit and it seems that this measure at this moment in time has come at the most inappropriate moment,” said a fund manager. Most global funds have been investing in emerging and developing markets such as India and China, he added.

Mr Arindam Ghosh, Chief Executive Officer, Mirae Asset Management, however said: “It is a step in the right direction as this would mean more opportunity for investors to invest and diversify their overseas investments.” Interestingly, it should be noticed that at the time when the limit of $5 billion was announced, the exchange rate was around Rs 39 whereas now it has crossed Rs 40.

The assets under management by the mutual fund industry for the month of March were Rs 5,27,705.93 crore. This figure came down from the previous month by 6.61 per cent.

More Stories on : Regulatory Bodies & Rulings | IPOs | Buyback

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