Leo Puri won't seek extension as Amfi chairman

UTI Mutual Fund managing director Leo Puri's latest letter, written in his capacity as chairman of Association of Mutual Funds in India (Amfi), to the board members of the association has once again raised question marks on industry body's effectiveness.

Puri, whose one-year term as Amfi's chairman ends in October, made it clear that he would not participate in upcoming election for the chairmanship. Generally, Amfi's chairman is elected for the second year too before the existing vice-chairman takes on the top job at the association.

"I have decided to hold to my stated views. I will therefore not participate in the election. I felt this should be communicated early enough so that there is enough time before the board meeting to plan a proper election and transition process," he said.

The outgoing Amfi's chairman, in his letter, urged the board to pursue steps for strengthening the secretariat based on a clarified mission statement, streamline board governance, participation and tenures, reviewing long term funding plans and initiatives that can only strengthen the association.

He further stressed that, "A chairman's role is to interpret the pulse of our members, to build consensus on critical issues, and to resolve conflicts equitably. It is not to impose views, and I therefore did not wish to push the issue of our governance reform in the absence of such consensus."

Sources told Business Standard that Amfi's board is likely to meet on October 7 for electing the new chairman.

Puri added, "I also think it is best to have a cooling off period, and a past chairman continuing can sometimes cast a shadow, so will also step off the board soon thereafter."

It is an open secret that there is rift between Amfi members.

Over the last two years, several regulatory measures had not gone down with the sector.

Some of them include capping of commissions, disclosures of commissions, disclosure of industry executives' salaries and their investments in their schemes, service tax on distributors' commission, continuous push for advisory model despite poor penetration of products and preference for direct plans, among others. Though Amfi tried to represent its causes to the government and the regulator, the lobby largely went unheard.

Industry players said the Amfi as an industry lobby has not been able to soften the blow on account of the adverse regulatory changes.

It is worth to note that Puri becoming Amfi's chairman last year was a bit of a surprise as Balasubramanian, CEO of Birla Sun Life AMC was pegged to take over the then chairman Sundeep Sikka, CEO of Reliance Nippon. What had gone in Puri's favour was his powerful stature in the industry as well as his reported rapport with the government. Balasubramanian continued to remain vice-chairman of Amfi.

The current chairman of the Securities and Exchange Board of India (Sebi), UK Sinha, was the Amfi chairman in September 2010 with Milind Barve, chief executive and managing director of HDFC MF, his deputy. After Sinha vacated his post to become Sebi chief, Barve was made chairman and Sikka was appointed vice-chairman. When Barve moved out, Sikka was promoted to be Amfi chairman while Balasubramanian was made his deputy.

In the last one year, the overall mutual fund industry's assets under management (AUM) has grown from a little over Rs 13 lakh crore to nearly Rs 16 lakh crore.