IFA associations IFA Galaxy and FIFA met SEBI today to submit
their suggestions for increasing MF penetration in the hinterland.
Market regulator SEBI met
major distributor associations today to seek suggestions to overcome the
constraints relating to distribution and reach of mutual funds. The meeting was
chaired by Prashant Saran, Whole-time Member, SEBI. The distributors were
represented by four members from IFA Galaxy and two from FIFA.
SEBI has asked mutual
fund distributors to increase volumes and expand the reach of mutual funds in Tier-II
and Tier-III towns. The two IFA associations present in the meet have submitted
a detailed recommendation plan to SEBI today.
Sources in the know
confirm that the following issues were discussed in the meet:
for uniform transaction and application form.
- Standardization of the minimum investment amount in all funds. Currently
different funds have various minimum investment amounts.
of the fund category in fund name, so that it is easy for the IFA as well as
the investor to understand the category in which he is putting his money. This
will be beneficial for attracting investments from tier II cities.
should officially declare some indicative yield for FMPs.
- SEBI should try to relax norms for in-person verification for NRIs.
- Charge variable load
(investor can mention the percentage they want to pay to the distributors) or
re-introduce entry load.
In the current scenario,
advisors are facing many hurdles which prevent them from substantially
increasing their reach. “Farmers in small towns don’t have a cheque book so we
take demand drafts from them. This becomes a third-party cheque which is not
allowed by SEBI. We have to get a certification from a bank which requires
investors to shell out Rs 100. Who will bear this cost? Investors are not
willing to pay. The incentive has to be embedded in the form of variable load
so that investors get to choose how much they want to pay,” says Ramesh Bhat,
President of IFA Galaxy, who was present at the meeting.
Mutual Fund CEOs are
also scheduled to meet SEBI today to discuss the challenges faced by them.