Also seek easing of prohibition on payment of upfront commission to distributors, among other changes.
Executives of mutual fund houses have suggested the Security and Exchange Board of India (Sebi) relax the know-your-client (KYC) norms for offshore funds through the qualified foreign investor (QFI) route.
In August, Sebi had issued detailed guidelines to allow KYC-compliant foreign investors, termed as QFIs, to invest in equity and debt schemes. However, the stringent KYC norms such as mandatory permanent account number and tax filing details have not gone down well with the fund houses.
In a recent meeting with Sebi chairman U K Sinha, the chief executive officers of fund houses asked the regulator to relax these norms, keeping in mind the Financial Action Task Force (FATF) guidelines, according to persons familiar with the matter. A QFI is a person resident in a country compliant with FATF standards, a signatory to the International Organisation of Securities Commission's multilateral memorandum of understanding. QFIs should not be resident in India or registered with Sebi as a foreign institutional investor or sub-account.
Mutual fund executives have also asked the capital market regulator to prohibit payment of upfront commission to distributors for domestic funds. They also want disclosure of commission payouts on their websites be kept only for institutional distributors and not for individual financial advisors, to maintain confidentiality.
Executives also want the regulator to review the advertising guidelines. Further, they have asked for a review of rules on transaction charges, particularly opt-in and opt-out.
On the issue of exit load, fund managers feel it should be extended to check redemptions. They also wanted a review of the process of distributor due-diligence. Earlier, fund managers had told Business Standard it was difficult for them to carry on this task with the distributors.
MF executives also asked Sebi to introduce the concept of different share classes. They have also requested a proper road-map instead of continuous regulatory changes.