AMFI to discuss risk management report in board meeting

Mutual fund industry body AMFI will discuss the EY report on risk management during its next board meeting to be held on November 17, a top official said today.
Sebi had issued a set of risk management guidelines for all the fund houses in 2002 itself. Still, the regulator wants to revisit those guidelines in the light of Amtek episode.
"Sebi had issued risk management guidelines way back in 2002. However, after the Amtek episode, Sebi wanted it to be revised and the regulator gave responsibility for this job on AMFI and it was how we appointed EY to submit its recommendations to us on the topic," AMFI chief executive CVR Rajendran said told PTI on the sidelines of a Morningstar event here.

"EY has submitted its report to us sometime back. In the report, it has given various options suggesting restrictions to be made by the fund houses on their investments like group, individual and rating risk exposure limit. However, the option for choosing the restricting limit has been left by EY on AMFI and we are yet to take a call on the subject," he said.
Rajendran added that "we will put the EY report before our next board meeting which was slated for November 17 and once approved by the board, we will submit the report before Sebi for its clearance".

As per the existing practice, the fund houses are supposed to get ratings for investment done by external rating agencies. However, the EY report has also recommended that it was not sufficient and rather it has advised such ratings to be undertaken even internally by the fund houses, he said.

The Association of Mutual Funds of India (AMFI), in its forthcoming board meeting will also consider the risk management guidelines which have been already set by RBI for banks in past, Rajendran said.
"We will also consider the guidelines on the topic which has already been issued by RBI for the banks," he said.

Sebi, before implementing the revised risk management guidelines, may call upon the members of AMFI for consultation, he hoped.