Sebi warns MFs on bailing out group companies

The mutual fund sector, which is already suffering due to the rise in bad debt papers, has got a strong warning from the Securities and Exchange Board of India (Sebi). The regulator in a meeting with MF players last month said any attempt to bail out group companies by buying lower-rated papers would lead to strict action.

Recently, there were strong rumours that a leading bank had sold some of its lower-rated papers to its mutual fund arm. "Sebi raised this issue in the meeting and told the representatives that if it finds any wrongdoing, there will be strong action against the fund house," says an industry player.

Industry lobbies for concessional tax on masala bonds

With the Finance Bill, 2016, staying silent on the concessional withholding tax of five per cent on coupon of rupee-denominated bonds, or masala bonds, a section of bankers and industry officers wrote to the ministry that the disparity be rectified.

Notably, a concession has already been given to non-resident investors in such bonds to account for currency fluctuations in this year's Union Budget. The Bill had proposed that if there was any appreciation of the rupee between the date of issue of the bond and date of redemption against the foreign currency in which the investment was made, the difference would be excluded while computing capital gains.

Investors in direct MF plans gain

Mutual fund investors in regular plans of a leading fund house would be disappointed. Recently, this fund house declared a dividend of Rs 0.04 per unit for both its regular and direct plans.

However, due to a 1.5 per cent fall in the market, the distributable surplus was wiped out for regular plan investors. But, direct plan investors were paid dividends because of a higher distributable surplus. Direct plans were introduced two years ago. All fund houses, now, declare two net asset values, one for direct plan and another for regular plan.