SEBI’s investigation has found that a few AMCs are flouting investment restrictions and valuation norms, said U K Sinha at the 11th CII MF Summit held in Mumbai recently.
“Investment restriction norms stipulate that fixed deposit receipts should not be there for more than 91 days and this should be done only when there is a short term difficulty in making investments in markets. This is has been violated in some cases,” said Sinha. However, he said that this practice is not prevalent across the industry.
Also, he pointed out that a few AMCs are charging fee for deploying funds in fixed deposits. SEBI regulations do not allow AMCs to charge management fee for investing in fixed deposits, he said.
In some cases, SEBI has also found that valuation and inter scheme transfers are not being done as per SEBI requirement.
The SEBI chief cautioned the industry that the regulator is watching and urged them to make amends. Sinha said that he would be happy if AMFI starts monitoring such practices. “AMFI can look at these practices and bring an environment whereby compliance standards improve in the industry,” he advised.
