Panic and doubts have started arising in the minds of the Indian mutual funds investors regarding the sustainability of the viability of the Indian Mutual Fund Agencies (AMC) after Securities and Exchange Board of India (SEBI) abolished the entry load. A fragile mutual fund industry is facing glut of fresh applications and the pressure of redemption’s. Investors are also dismayed with the exit charges levied by AMC’s under the directive of SEBI. AMC’s have increased the exit load durations, some up to 3 years. As per today’s circular, SEBI website circular says that “The mutual fund may charge the load within the stipulated limit of 7% and without any discrimination to any specific group of unit-holders.” It further writes that “It is observed that the mutual funds are making distinction between the unit holders by charging differential exit loads based on the amount of subscription.” Mutual Fund AMC’s have either not charged any exit load or decided on less period of investment duration, for applications above Rs. 5 crores. This will definitely deter the fresh investments.
Worried AMC’s are finger pointing at SEBI but are afraid to speak out in the public. AMC’s reasoned that the AMC directors in SEBI had rejected the proposal. Subsequently the proposal was put on vote on SEBI intranet and they are not aware of the results of the poll. The decision by SEBI Chairman S D Bhave was a bolt from the blue for the AMC’s and AMC’s allege that the proposal was never discussed with them after the initial rejection.
Distributors have started getting queries on the safety of the funds from their clients. While investors are aware of the dwindling fresh applications, the August redemption figures will be published only on September 10th and it might be too late for investors.
Industry feels that SEBI has harmed the investors more than the AMC’s and distributors.
Worried AMC’s are finger pointing at SEBI but are afraid to speak out in the public. AMC’s reasoned that the AMC directors in SEBI had rejected the proposal. Subsequently the proposal was put on vote on SEBI intranet and they are not aware of the results of the poll. The decision by SEBI Chairman S D Bhave was a bolt from the blue for the AMC’s and AMC’s allege that the proposal was never discussed with them after the initial rejection.
Distributors have started getting queries on the safety of the funds from their clients. While investors are aware of the dwindling fresh applications, the August redemption figures will be published only on September 10th and it might be too late for investors.
Industry feels that SEBI has harmed the investors more than the AMC’s and distributors.
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