The industry had discussed various types of loads with SEBI during the meeting on 3rd May.
It is learnt that SEBI is not keen on re-introducing the entry load in the original format, says a CEO of a mid-sized fund house who met SEBI recently. Yesterday, distributor associations have requested SEBI to bring in a variable load. Some are of the view that there should be different loads for equity and debt funds.
Mutual fund CEOs have given their feedback to SEBI over the last few days. AMC CEOs are meeting SEBI one by one to discuss the issues faced by them. SEBI’s main agenda for the meeting is a discussion on the ways to increase the revenue and penetration of mutual funds. Yesterday, a CEO of a small fund house requested SEBI to hike exit loads and relax KYC and KYD norms.
KYC and particularly in-person verification (IPV) has become a major hindrance for distributors.
SEBI allows AMCs to charge up to 6% exit load. Exit loads help AMCs to deter investors from early redemption. Anything charged above 1% has to be written back to the scheme. However, no AMC has introduced such a high exit load so far as they fear a higher exit load can also put off some investors from investing. AMCs are allowed to use 1% exit load collected from investors exiting before one year for marketing and distribution expenses.
