Sebi's diktat on greater 'skin in the game' may slow down NFO gravy train

At present, AMCs have to invest the lesser of 1% of amount raised during a NFO or Rs 50 lakh. Sebi board has now linked minimum amount to the risk associated with each scheme

The Securities and Exchange Board of India’s move directing asset management companies (AMCs) to invest more in their new fund offerings (NFOs) could force the industry to go slow on new product launches.

At present, AMCs have to invest one per cent of the amount raised during a NFO or Rs 50 lakh, whichever is less. The Sebi board on Tuesday said asset managers will have to “provide for investment of a minimum amount as skin in the game…based on the risk associated with the scheme.”

A circular detailing the new framework is expected soon. However, industry players said the