Surprisingly, distributors are not praying for U K Sinha to succeed Bhave as Chairman of SEBI. They are not expecting roll back of abolition of entry load if Sinha is chosen as the next SEBI Chairman, writes Anju Yadav
Mumbai: The revenues of distributors of mutual funds were hit hard by the SEBI decision to abolish entry load from August 1, 2009. One of the vocal critics of the decision, U K Sinha, Chairman of UTI Mutual Fund, is now being considered for succeeding C B Bhave, whose term as Chairman of SEBI ends in February 2011.
Cafemutual spoke to a number of distributors to gauge the expectations among the community at the possibility of Sinha becoming SEBI Chairman. Uncharacteristically, the distribution community is not over optimistic about Sinha taking over the reigns at SEBI. Some even said Sinha does not have a great chance of making it.
None of them expect Sinha to roll back SEBI’s decision to do away with entry loads on investments in mutual funds. They feel the decision cannot be annulled now.
But, the distributors say with certainty that Sinha would be more considerate towards the plight of the distributors who are an essential part of the mutual fund industry.
A large distributor based in Mumbai said, “Sinha has experience of the financial services industry. He knows where the industry is headed. He may, therefore, take decisions which will be good for the industry. He won't rollback the entry load, but he may have a dialogue with the Ministry of Finance to improve the conditions for distributors.”
Some of them said Sinha may allow insertion of a column in the mutual fund application form itself that specifically mentions a fee to be paid to the distributors.
They rightfully suggested that the role of a SEBI chairman is not to just look at the small part of mutual funds but to oversee the broader securities market.
Another distributor said the primary focus of Sinha as SEBI Chairman would be to protect the interests of investors and ensure healthy growth of the industry. SEBI will have to look at the kind of services the investors get from the distributors.
Yet another IFA said Sinha had shown a good understanding of the problems of distributors whenever they had an information conversation with him. “He will work for the growth of the industry as he has a better understanding of the mutual fund industry.”
Sinha, who is also the AMFI Chairman, had not applied for the position of SEBI Chairman which falls vacant in February 2011. He had lost out in 2008 to Bhave, who too had not applied for the position but was invited by the selection panel for an interview.
The others in contention include R Bandyopadhyay, Corporate Affairs Secretary, and K P Krishnan, Secretary of the Economic Advisory Council in the Prime Minister’s office. Bandyopadhyay is also currently a member of the SEBI board.
