SEBI Chairman U K Sinha has said that the two basis points of assets under management (AUM) set aside by fund houses for investor education should be implemented seriously, else SEBI would be forced to step in and deploy them.

From October 2012 to April 2015, this (two basis points) amounted to Rs 500 crore according to Sinha.

“We cannot remain silent spectators,” Sinha said while adding that onsite visits by SEBI officials to 18 locations across 22 AMCs found that only 18 per cent of the venues had genuine investors. In 65 per cent of the cases there was no surety that the programme would be held and in they were either advanced or cancelled. In six per cent of these cases they were distributor events.

“A majority of the funds are doing very good job but through our onsite inspection we have come out with few developments things is not healthy and I expect the industry will come together and will take some action where real purpose of investor education fund is utilised. The whole idea of advisory regulation was that. We should move towards a system where the customer takes help from advisors. In other countries like UK this thing is practiced. But we are finding that there are agencies which are distributing products and also advising and this is happening mainly in the smaller towns in a bigger manner. So this is not acceptable to SEBI in a long run. We would like to wait for some more time and we would like such entities to know that we are watching them. If we see things are not improving then we would have to take some measures. And the SEBI act is reasonably powerful in this matter,” warned Sinha.

He felt the need for more transparency in key information memorandum and the scheme information documents filed by fund houses.

He also observed that a few fund houses were found violating the 91-day norm of investing in fixed deposit receipts of banks besides charging AMC fees for such investments. He also said that a few others were violating SEBI norms of valuation/inter-scheme transfer. “We are watching. Please amend this behaviour,” Sinha said.

If these small issues were taken care of, then with increase in AUM, performance as well as trust in the mutual fund industry would go up, felt Sinha.

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