The Hindu Business Line : SEBI advises MFs to focus on hassle-free redemptions

Mumbai, June 18 Capital market regulator SEBI is concerned about the kind of service mutual funds are providing to their investors and wants the industry to focus on the hassle-free redemptions and also conduct an investor survey, in their own interest.

The regulator has also decided to set up a mutual fund advisory committee to address the issues faced by the industry.

Investors’ complaints

Talking about the complaints received regarding the way the redemptions were being handled by the Asset Management Companies, the SEBI Chairman, Mr C.B. Bhave, said that mutual funds’ focus was more when people invested in their funds and not so much when they made an exit.

Mr Bhave referred to complaints from investors, while exiting their fund as the AMCs provided fixed exit route in terms of bank account and branches where redemptions were to be made, while speaking at the CII’s Mutual Fund Summit 2008 here. There should be flexibility and exits should be as per investors’ wish, said Mr Bhave.

“Take up investor survey to find out what they feel about your products, why do they like certain products,” suggested Mr Bhave after releasing the PricewaterhouseCoopers’ report on the Indian mutual fund industry.

“Focus on what the client wants, as this will be in your interest,” he added.

Receiving feedback

SEBI has an advisory committee on secondary and primary market, but there is no advisory committee on mutual funds.

So the regulator has now decided to set up an advisory committee.

“We are setting up an advisory committee on mutual fund that will take advice from investors and participants on what (issues) were bothering them,” he said.

Mr Bhave said that the idea behind this committee was that the SEBI should never assume that it had the entire knowledge within itself.

The mutual fund advisory committee will be set up in a month’s time, he said.

The SEBI Chairman also suggested setting up of a depository that will maintain database of all mutual fund investors across the country, much in line with the depositories for the equity market.

SEBI is also planning to hold a workshop for the trustees to get their feedback and to know their requirements.

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