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India Infoline Group has received approval from the stock markets regulator to enter the mutual fund industry.
The company in an announcement to the stock exchanges said it would float IIFL Mutual Fund under the sponsorship of India Infoline Limited. However, on the SEBI Web site the approval status shows ‘under process'.
“We had received the in-principle approval a long time back, but the final approval has just been received,” said Mr Nirmal Jain, Chairman, IIFL Group. “IIFL, with its distribution reach spanning over 500 cities, is well placed to take the mutual fund penetration wider and deeper. Today, the top 10 cities account for about 80 per cent of mutual fund mobilisations and there is a huge opportunity in tier-II and tier-III cities.”
The approval with SEBI had been pending since January 2008.
Union KBC Asset Management, which has been looking to enter the mutual fund space in India, will also be getting the SEBI nod “very soon”.
“The papers for approval have been cleared and we will be receiving the approval very soon,” Mr G. Pradeepkumar, CEO, Union KBC Asset Management Company, said.
According to earlier reports, Union KBC AMC was to start its operations in December 2010. But the fund house maintains that there has been no delay on the part of the regulator. “The infrastructure approval only happened six weeks back. So, we don't think there has been any delay in the process.”
Union KBC had applied for the regulator's approval in February 2009 and the approval status for the same continues to be under process, according to the SEBI Web site.
Union Bank of India and Belgian KBC Asset Management are joint venture partners for the AMC.
Getting the nod
The process of approval from SEBI involves getting an in-principle approval and a final approval. The in-principle approval basically states that the contract and terms of the business are acceptable to the regulator. The final approval is given after proper due diligence and audit of the various entities that go into the functioning of a fund house are done. These include the credit and track records of the sponsors, the infrastructure and systems in place and the people working in the AMC – the core team as well as the trustee team.
There are 44 mutual fund houses in the industry today managing average assets worth Rs 7 lakh crore.
After the entry load ban, due to profit margin pressures, several smaller fund houses were compelled to either sell their business or close shop. Things are slowly looking up and consolidation seems to be the way forward, say analysts.
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