Suresh Parthasarathy

BL Research Bureau

SEBI's policy changes for mutual funds seem to continue despite the many reforms enforced during the past year. The latest involves reducing the new fund offer duration to a maximum of 15 days for schemes other than equity-linked saving and allotment within five days of closure.

Investors: The money collected will be invested only after 15 days, hence there will be no major change in NAV on listing.

Without any sizeable gain on listing, the investor's interest in NFOs may wane. He may prefer to buy units through his stockbroker or online account, or applydirectly after the issue to avoid blocking money, even though ASBA (application supported by blocked amount) is permitted under the new circular.

Fund Houses: Typically, they collect a major part of the funds in the last few days and are not affected by the new circular. But in some cases, applications were informally collected with predated cheques for three-four days after closure of NFOs. Banks used to issue a collection certificate accordingly.

But now mutual funds have only five days to complete the issue, and the registrar cannot allot the units until it receives a consolidated letter from the bankers with investor details.

Marketing will be unaffected for fund houses. According to SEBI rules, the scheme can be launched within six months from approval, giving fund houses enough time for promotional activities.

Registrar: Currently both the registrars — CAMS and Karvy Computershare — have upgraded their technology, so allotment of units will not be affected. With decentralised branch offices in many towns, they can present the cheque for collection at the respective centres. They can send images of the application forms to the central office of the registrar.

With distributors not being aggressive in selling NFOs, the number of applications has dropped to 20,000-30,000. That too will simplify matters for registrars, at least until collection figures return to earlier levels.

(This article was published in the Business Line print edition dated March 20, 2010)
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