MFs stare at further tightening as Sinha retained again

Sebi under him had frowned upon practice of paying high commissions to distributors

The second term extended to U K Sinha for Sebi chief may not have brought cheers to the mutual fund industry as it fears market regulator will now go ahead with implementation of contentious proposals like making distributor commissions part of investor statement and moving towards an advisory-based commission structure.

"We feel that Sebi wants to do away with distributors' commission and wants the industry to shift completely to the advisory-based structure. The regulator has made its intention quite clear at various public foras. We could now see actions as the current chief has got a year's extension. The industry may not be ready for such a drastic step," said a senior official at fund house.

 

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The industry has also expressed reservations on making disclosure on distributors' commission part of investor account statement.

Some players believe Sebi may also reduce expense fee or even withdraw extra incentives on moblising assets from smaller centers.

Under Sinha's leadership, Sebi approved long term policy for mutual funds to enhance the reach of mutual fund products and make them more investor friendly.

Sebi had in the past frowned upon practice of paying high commissions to distributors and also the industry practice of launching too many similar schemes. Sebi had recently tightened investment norms for debt mutual funds to reduce concentration risks.