Market regulator SEBI’s mutual fund advisory committee’s meeting in Mumbai on Tuesday has recommended that fund houses with assets under management (AUM) of over Rs 1,000 crore should have a net worth of Rs 25 crore.

The current net worth requirement for an asset management company (AMC) is Rs 10 crore.

Those with lower AUMs have been given the long rope and told to comply within the next three-five years. The committee was more in favour of five years.

The committee has also suggested Rs 25 crore as the minimum net worth for new applicants.

Seed capital

The committee has also recommended that fund houses need to put in seed capital of Rs 50 lakh for every scheme. This would be counted as part of net worth and excludes fixed maturity plans.

The recommendations of the mutual fund advisory committee would be sent to SEBI for approval.

SEBI Chairman U.K. Sinha has been candid in his displeasure over the non-serious attitude of the bottom-ranked fund houses.

“I am very clear, that this industry needs some very serious players. Only 1 per cent of the AUM is from the bottom 10 AMCs. This percentage has not changed substantially in the last five years. It gives an impression that we have got some non-serious players in the industry.

The regulator had also hinted at disincentives for fund houses that did not go beyond the top 15 cities.

“If you are a player who is not keen to go to retail.... who is not going to serve small towns, there are perhaps other avenues for you.

“You need not be an AMC, you can decide to be a portfolio manager, for example, or an alternative investment fund. If you want to be a MF player you got to be serious,” he had said.

>raghavendrarao.k@thehindu.co.in

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