Mumbai: Admitting that it was tough for the mutual fund sector last year, capital market watchdog Sebi on Wednesday asked industry to encourage retail investors in the face of huge redemption pressure from corporates.
“Higher percentage of AUM (asset under management) must come from retail. Last year was a tough year for mutual fund industry and redemption pressure came mainly from corporates,” Sebi chairman C.B. Bhave said in a CII mutual fund summit.
In the face of financial turmoil in advanced economies, Indian mutual fund firms faced high redemption pressure in 2008-09, prompting the Reserve Bank to open special borrowing windows for MFs.
However, at the same time, participation from the corporate investors is also needed in the MF industry, Bhave said.
“I’m not saying that corporates should be driven away,” he said.
Asked on the variable load structure on MF schemes, Bhave said that Sebi has issued a discussion paper on variable load structure and has received comments from market participants.
“After analysing these comments, (the) Sebi board will decide the future course of actions,” he said.
On the proposal to increase the networth limit of intermediaries, Bhave said that the market regulator had set up a committee to review the networth norms and the committee is presently finalising the report.
“The committee is finalising the report and once the report comes to us, we will take a decision on that,” Bhave said.
India’s debt market needs to be more liquid and greater confidence should be generated in the debt market like in equity market, Bhave said.