Sebi tightens norms for debt-oriented mutual fund schemes

Concerned over debt-oriented mutual funds schemes having low asset base, Sebi today said such schemes should collect at least Rs 20 crore at the time of new fund offer.
Besides, the capital market watchdog has directed the mutual funds to maintain an average asset under management (AUM) of Rs 20 crore on half yearly rolling basis for open ended debt oriented schemes.
"The minimum subscription amount of debt oriented and balanced schemes at the time of new fund offer shall be at least Rs 20 crore and that of other schemes shall be at least Rs 10 crore," Securities and Exchange Board of India (Sebi) said in a circular.

According to Sebi, the requirement of having at least Rs 20 crore AUM on half yearly rolling basis should be compiled within one year by all existing open ended debt oriented schemes.
"It has been observed that many debt oriented schemes are operating with a very low AUM," the Securities and Exchange Board of India (Sebi) said in a circular today.
"In the interest of investors, it is important that debt oriented schemes have an adequate corpus to ensure adherence to the investment objectives...," the market regulator added.

In case of non-compliance with Sebi directives on AUM, the Asset Management Company (AMC) would have to scale up the AUM of such scheme within a period of six months, failing which the board may ask the scheme to be wound up.

"The confirmation on compliance... Shall be reported to Sebi in the half yearly trustee reports," the circular said.
Last month, the mutual fund industry's assets under management crossed Rs 10 lakh crore, mainly helped by strong capital inflows and a surge in equity markets.
The assets under management (AUM) of mutual funds rose to Rs 10.11 lakh crore in May from Rs 9.45 lakh crore in April, a growth of seven per cent.