The stock market regulator has warned mutual funds against cutting cosy deals with companies as banks turn off credit taps to distressed borrowers. The Securities and Exchange board of India (Sebi) has told mutual funds not to get into transactions aimed at bailing out corporates at the cost of investors.
Sebi conveyed this to mutual fund executives in a recent meeting to discuss industry's growth roadmap. Top Sebi officials including chairman UK Sinha, whole-time director S Raman and executive director Ananta Barua attended the meeting.
"Sinha said that if Sebi come across instances of mutual funds buying papers to benefit the parent or any group entity, they will strictly deal with it," said a mutual fund executive who attended the meeting.
The Sebi chief did not specify if it has come across instances of such transactions, the executive added.
