SEBI chief urges industry to expand and tap the large pool
of money invested in unauthorised chit funds.
SEBI chief U K Sinha urged the
industry to have a relook at their business model at a fundamental level,
pointing out at the slow progress made by the industry in expanding their reach
in tier II and tier III towns.
"Only 52 branches have been
opened so far. The total number of branches of the asset management industry in
the country is 1600. One can argue that they have tie ups with distributors who
are present across the country which is a fair argument. But I can’t stop
taking note of the fact that one large insurance company has opened 300
branches in one single day. I do concede that it is not a fair comparison but I
would like to say that the way industry is conducting business needs to be
relooked at a very fundamental level,” said U K Sinha at the 9th CII Mutual
Fund Summit held in Mumbai.
AMCs can manage pension money
On an argument that the industry
would see higher growth if allowed to manage pension money, he said that the
mutual fund industry is already allowed to manage pension money. “I would like
to challenge all of you by making a statement that pension money is
allowed to be invested in the asset management industry and what are we
doing about it. Let me explain how. SEBI has permitted that AMCs can manage any
pooled investment. Under the Employees Provident Fund Act, employee
contribution is mandatory to the EPFO only when an employee is earning a salary
of Rs 6500 or less per month. If it is more than Rs 6500 it is not mandatory.
So the employees and the management can jointly decide to manage their own
fund. Any AMC can manage this corpus. How many AMCs have marketed their
services in such companies? SEBI will be willing to work with you in this
regard. The PFRDA Act has not been passed in the country for ten years now. I'm
trying to encourage you to think in a new manner. We should try to explore the
existing opportunities instead of being despondent".
The SEBI chairman also urged AMCs to commit capital to grow their business. He also urged the asset management industry to tap the large pool of money being put in unauthorised chit funds. "We are very keen that this industry should grow. We are trying hard to live up to the legislative intent of the mutual fund industry.”
