In a front page news report carried in Thursday’s edition of The Financial Express, the Ministry is said to have declined a SEBI proposal to include equity funds under the recently announced Rajiv Gandhi Equity Savings Scheme (RGESS).
The Finance Ministry officials are reported to have said that routing RGESS through mutual funds will defeat the purpose of this tax-free equity savings scheme. “This scheme has been built on a different philosophy of attracting first-time investors. Mutual funds are already selling equity-linked savings scheme which also offer tax incentives,” the official is reported to have said.
Earlier, SEBI is believed to have recommended to the Ministry that mutual funds were more suited to first-time investors for entering the stock market. Most investment experts have favoured the inclusion of mutual funds in RGESS as they offer a diversified portfolio and professional management. Left on their own, first-time investors would neither have stock picking abilities nor achieve diversification within the investment amount of Rs. 50,000.
