In 2014 when the then SEBI chief U K Sinha proposed an increase in the net worth of mutual fund Asset Management Companies (AMCs) by 10 fold to Rs 100 crore, he was greeted with a wave of opposition by the industry and many in the business media. Finally the regulator pushed through a 5-fold increase to Rs 50 crore. Under Sinha the SEBI had also mandated that AMCs must invest seed capital of 1% of the corpus in all their funds to ensure some skin in the game. The time has probably come to reconsider what the former regulator wanted – ie; increase the skin in the game of the AMCs by either increasing their net worth as Sinha wanted or increase their seed capital or both.
