Funds fear further tightening

A year's extension to U K Sinha as chief of the market regulator hasn't brought cheer to mutual funds as they fear Sinha will now do away with distributors' commissions and will move towards an advisory-based commission structure.

"Sebi (Securities and Exchange Board of India) has made its intention quite clear on various forums. The sector may not be ready for such drastic steps," said a fund official.

The sector has also expressed reservations on proposal to make distributors' commission disclosures a part of investor-account statements.

Some funds believe Sebi may reduce expense fee or even withdraw extra incentives on mobilising assets from smaller centres. Under Sinha's leadership, Sebi has approved a long-term policy for mutual funds to enhance the reach of their products and make them investor-friendly. Sebi has frowned upon the practice of paying high commissions to distributors and it has also frowned upon the practice of launching many similar schemes. Sebi had recently tightened investment norms for debt mutual funds to reduce concentration risks.