When the Reserve Bank of India sought MF business details from banks (ADC issue – June 20, 2011), the Deputy Governor came up with another discouraging statement for the industry last week, stating that the mutual fund industry has not lived up to expectations of promoting savings and financial inclusion in the country.
Subir Gokarn, Deputy Governor, RBI said, “The role of mutual funds to promote savings continues to be insignificant, with mutual funds contributing less than 10% of the Indian GDP, despite its popularity the world-over.“ He was speaking at the 7th Mutual Fund Conference of the Confederation of Indian Industry (CII).
“One major reason is that mutual fund penetration in rural areas is small and there is a perception that, they are only for the middle and high income groups. For the mutual fund sector to grow fast, we have to device appropriate schemes to attract the rural populace and find ways of financial inclusion for low income household.” The statements of RBI are coming when the MF industry is bearing brunt of various regulatory measures taken by the regulatory bodies in the country.
On the other hand, indicating slews of disclosure norms for the industry in the pipeline, the Securities and Exchange Board of India (SEBI) Chairman, U. K. Sinha at the same conference stressed the need for more disclosures and regulation. However, he added that the changes should be brought in a non-disruptive manner in the mutual fund industry.
“SEBI is looking into distributor regulation, but not in a disruptive manner. It will be for limited number of large distributor and will be a disclosure-based system. If we set the rules of games and apply it uniformly, it will help the industry,” Sinha said.
He also said, “With the number of folios declining and small town sales reducing, there is a need to incentivise the distributor. Unless incentives are given to distributors, it will be difficult to increase penetration of the industry and help its potential for transferring gains of the economy to the remote corners of the country and its populace”.
Sinha said, “The mandate for SEBI is three fold: to protect the interests of investors, to develop the market and to regulate the market. In our view, these three are not contradictory and we work equally towards all three mandates. It is, hence, our motive to increase transparency, bring about a good level of disclosure, have uniform KYC (Know Your Customer) for all activities within the capital market, bring uniformity in the use of load balances, enhance liquidity for faulty liquidities, put up a SEBI complaint redressal system and deal with wrong or unauthorised news by intermediaries severely”.
The statements from the same dais, from the key regulatory bodies have certainly put the balls rolling in different directions for the MF industry. Though, it would take time to see the implications, there is nothing more for the industry to do at this moment.
Daiwa Mutual Fund announces dividend under its scheme
Daiwa Mutual Fund has declared dividend under Daiwa Government Securities Fund-Short Term Plan, an open ended gilt scheme. The quantum of dividend for distribution is Rs. 11.57 per unit, on the face value of Rs. 1000 per unit. The investment objective of the scheme is to generate income and capital appreciation by investing predominantly in sovereign securities issued by the central government (including treasury bills) and/or by state governments, with maximum average portfolio maturity of less than three years. The record date for dividend distribution is 23rd June 2011.
HDFC Mutual Fund revises exit load structure under HDFC FRIF- Long Term Plan
HDFC Mutual Fund has announced the revision of the exit load structure of HDFC FRIF- Long Term Plan. Accordingly, an exit load of 2% will be charged if the units are redeemed or switched out within 12 months from the date of allotment. HDFC Floating Rate Income Fund – Long Term Plan is an open ended income scheme which has the investment objective to generate regular income through investment in a portfolio comprising substantially of floating rate debt / money market instruments, fixed rate debt / money instruments swapped for floating rate returns and fixed rate debt securities and money market instruments. The change will be effective from 24th June 2011.
Fidelity Mutual Fund revises exit load structure under Fidelity Ultra Short Term Debt Fund
Fidelity Mutual Fund has announced to revise exit load structure under Fidelity Ultra Short Term Debt Fund. Accordingly, an exit load of 0.50% will be charged if the units are redeemed within 3 months from the date of allotment or purchase applying first in first out basis. Fidelity Ultra Short Term Debt Fund is an open ended debt scheme with an investment objective to generate reasonable returns and liquidity primarily through investment in money market and short term debt instruments. The revision will be effective from 23rd June 2011.
Bharti AXA Mutual Fund announces dividend under its Equity Fund
Bharti AXA Mutual Fund has declared dividend under Bharti AXA Equity Fund, on the face value of Rs. 10 per unit. The quantum of dividend for distribution is Rs. 0.50 per unit. Bharti AXA Equity Fund is an open-ended equity growth scheme with an investment objective to generate income and long-term capital appreciation through a diversified portfolio of predominantly equity and equity related securities including equity derivatives, across all market capitalizations. The record date for dividend distribution is 27th June 2011.
HDFC Mutual Fund announces dividend under its Medium Term Opportunities Fund
HDFC Mutual Fund has declared dividend under HDFC Medium Term Opportunities Fund, on the face value of Rs. 10 per unit. The quantum of dividend under distribution is Rs. 0.177 per unit for individuals and HUF and Rs. 0.1517 per unit for others. It is an open ended income scheme with an investment objective to generate regular income through investments in debt or money market instruments and Government securities with maturities not exceeding 60 months. The record date for dividend distribution is 28th June 2011.