At a time when foreign fund houses are exiting Indian asset management business, a few domestic players are gung ho about mutual fund business.
SEBI’s data on ‘Status of Mutual Fund Applications’ shows that Muthoot Finance, Frontline Capital Services and Karvy Stock Broking are awaiting approval from SEBI to launch their mutual fund business in India.
While Muthoot Finance and Frontline Capital Services approached SEBI in March 2017 and July 2017 respectively, Karvy Stock Broking has been waiting to get in-principle approval from SEBI since seven years. It had applied for AMC licence in November 2011.
Interestingly, all three companies have a mutual fund distribution arm. AMFI data shows that the wealth management arm of Frontline Capital Services and Karvy Stock Broking have assets under advisory (AUA) of Rs.616 crore and Rs.6,634 crore, respectively as on March 2017. The AUA details of Muthoot Finance are not available in the AMFI’s list of top 500 distributors. Muthoot Finance is a gold financing NBFC.
Last year, Yes Bank, Fortune Financial Services and Trust Investment Advisors got SEBI in-principle approval to float an asset management business. Likewise, all these three companies have mutual fund distribution arms.
SEBI rules say that the sponsor applying for a mutual fund licence is required to be in the financial services business for five years and needs to have a positive net worth for five years. The sponsor should have earned profits in three of the previous five years, including the latest year. SEBI conducts an on-site due diligence of sponsors before granting approval.