SEBI asks MFs to standardize format

The Securities and Exchange Board of India (Sebi) has urged the mutual fund industry to adopt a standardised disclosure format, which should include the amount of commission they pay to distributors, value of assets and where they were invested.

Speaking at a Indian Chamber of Commerce (ICC) meeting in Kolkata recently, Radhakrishnan Nair, executive director, Sebi, called for more transparency in fixed income, derivative and structured products.

"With new products are coming in, there is a need for proper risk dissemination mechanism. We are working with the mutual fund industry to enough disclosures," he said.

While mentioning that the Indian capital markets need not necessarily require imitating the western markets in the backdrop of the recent sub prime crisis, Nair said, "Sebi is doing a balancing act, so as to ensure steady market in bad times."

The Indian AMCs were some of the most profit making concerns in the country, he said.

Rajiv Bajaj, managing director, Bajaj Capital, said the decision to scrap entry load if an investor approached the AMC rather than distributor, created conflicts and confusion among the minds of the investors.

In response, Nair said, the decision was aimed to give maximum value to the investor, and provided the AMCs an opportunity to come up with innovative-low cost products.

Jayanta Roy, director-corporate planning and strategy, Peerless General Finanace and Investment, said the present state of the MF industry in India was that of the telecom industry about five years ago, and needed to open up further.

About 75 per cent of the asset under management and 95 per cent of the profit in the MF industry came from 12 cities, Roy claimed.

Udayan Bose, chairman, Calcutta Stock Exchange, said, Indian MFs should be allowed to accept funds from individual foreign investors.