After DSP BlackRock, IDBI and SBI have also filed offer documents with SEBI for RGESS.
Fund houses are rushing to file offer documents for Rajiv Gandhi Equity Savings Scheme (RGESS).
Last month, DSP BlackRock had filed an offer document with SEBI to launch its RGESS. Now, SBI and IDBI Mutual Fund have also filed their offer documents with the regulator. Fund houses are expecting to get a nod from SEBI promptly as the tax season comes to an end in March. AMC have three months’ timeframe to reach a pool of first time equity retail investors.
Reliance has earlier filed for an offer document for R*Shares CNX 100 ETF which it plans to convert into RGESS. Quantum Mutual Fund is tweaking its Quantum Index Fund ETF into RGESS. Peerless Mutual Fund is also in the process of filing an offer document for launching an ETF based RGESS. Religare Mutual Fund has announced that Religare Nifty ETF qualifies for RGESS. Four of Goldman Sachs ETFs are eligible for RGESS.
Fund officials say that existing mutual fund investors who have not invested in equity markets directly could also be eligible for RGESS if they meet the other criteria. In such a situation where existing MF investors are eligible, AMCs can tap their existing investors. Fund officials are not sure of how much money they will be able to garner from new retail investors.
Industry officials say than given the huge number of PAN card holders who don’t possess a demat account, the potential is big. There were more than 12 crore PAN card holders in 2011 and around 1.25 crore demat accounts registered with NSDL and 80 lakh with CDSL as of now. “Both AMCs and brokers have an incentive to promote RGESS,” said a senior official from the industry.
“Their idea is to open more demat accounts. Today demat penetration is low. There will be some challenges in getting new retail investors. However, the tax break could attract investors,” said Deepak Chatterjee, MD & CEO of SBI Mutual Fund.
RGESS was announced in the Union Budget 2012-13 for first time retail equity investors, offering investors a tax benefit for investments up to Rs 50000 who earn up to Rs 10 lakh under a new section of 80CCG. Currently investors can avail tax benefit for investments of up to Rs 1 lakh under section 80 C of the Income Tax Act through equity linked savings scheme (ELSS).
