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MFDs are not likely to get B30 incentives in the near future as the MF industry is yet to prepare a mechanism to monitor the misuse of B30 norms by AMCs and distributors, said three members of the AMFI board and committees.
An MF official requesting anonymity said that SEBI will not allow AMCs to charge additional expenses in lieu of B30 retail assets if the industry does not come out with a concrete plan to curb its misuse. “SEBI has clarified that they will not allow us to charge B30 expenses until we put in place a mechanism to monitor or track misuse of B30 incentives. Currently, the industry is busy with other things like submitting nomination, PAN Aadhaar linking and removal of tax benefits from debt funds.”
Another official said that the AMFI has not constituted any task force who would suggest measures to track misuse of B30 incentives at an industry level.
From March 1, 2023, AMFI barred fund houses from charging additional expenses in lieu of B30 retail assets. AMFI said that the temporary suspension will be lifted once fund houses put in place a mechanism to monitor and track misuse of B30 incentives by distributors/AMCs.
The new system is expected to track instances of splitting of transaction, churning and calculation of B30 incentives.
Currently, AMCs can charge an additional 30 bps for bringing retail application of up to Rs.2 lakh from B30 cities. Fund houses use this additional TER to incentivize distributors for bringing retail investors from B30 cities.
