Sebi to ease capital, disclosure requirement norms for passive funds: Report

The proposed Sebi norms would also allow existing fund houses to hive off their passive investment schemes into separate entities to take advantage of the looser regulation

Jayshree P Upadhyay (with inputs from Reuters)
Published28 Nov 2023, 05:21 PM IST
Trade Now
Sebi plans to reduce the capital requirement for passive only fund houses to about  <span class='webrupee'>₹</span>10 crore from  <span class='webrupee'>₹</span>50 crore currently, the report said
Sebi plans to reduce the capital requirement for passive only fund houses to about ₹10 crore from ₹50 crore currently, the report said

India's markets regulator plans to lower capital and disclosure requirements for fund houses that run passive investment schemes, according to three sources with direct knowledge of the matter.

Proposed new rules would also allow existing fund houses to hive off their passive investment schemes into separate entities to take advantage of the looser regulation, these people said.

Also Read | Uttarkashi: ‘2 meters more needs to be dug’, NDMA says ‘we are not in a hurry'

The Securities and Exchange Board of India (SEBI) will seek public comments on the proposals before finalising the rules, the sources said, declining to be identified as they are not authorised to speak to the media.

SEBI did not respond to an email from Reuters.

The regulator first flagged the prospect of lighter regulations for passive funds in its annual report in August. The details of those proposals have not been previously reported.

Also Read | What is rat mining? How a banned practice turned the tide of Uttarkashi tunnel rescue operations

Assets under management of passive funds surged sevenfold to 7.9 trillion rupees between July 2019 and September 2023 and now account for 17% of the total industry.

Passive funds replicate indexes, leaving less discretion for fund managers.

SEBI plans to reduce the capital requirement for passive only fund houses to about 10 crore from 50 crore currently, the sources said.

The regulator will also prescribe more liberal disclosure rules for such fund houses.

Instead of the current requirement of providing portfolio disclosures every two weeks or every month, passive only fund houses will need to declare that they are following a particular index every six months, two of the three sources said.

Also Read| Tata Tech IPO allotment expected soon; here's how to check allotment status

Rules around maintaining call records of fund managers, currently required for all fund houses, may also be eased for passive only funds, they said.

"With the lighter touch regulations, global players such as Vanguard, State Street SPDRs, and others who have a core focus and expertise only in passive funds, can become more keen to set up business in India and launch a passive only fund houses under this proposed light touch regulations," said Anil Ghelani, head of passive investments and products at DSP Asset Managers, an Indian asset management firm.

In July, Blackrock, the world's largest money manager tied up with Mukesh Ambani's Jio Financial Services to launch a fund house in India but others like Vanguard are yet to enter the Indian market.

SEBI could also relax rules to remove caps on passive funds' exposures to individual stocks, said the sources.

Existing rules say that no fund house can invest more than 25% of its assets in a group of connected entities. A fund can also not hold more than 10% of the company's paid-up capital.

Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

MoreLess
First Published:28 Nov 2023, 05:21 PM IST
Business NewsMarketsStock MarketsSebi to ease capital, disclosure requirement norms for passive funds: Report

Most Active Stocks

Indian Oil Corporation share price

179.90
03:58 PM | 27 SEP 2024
8.4 (4.9%)

Tata Steel share price

166.50
03:59 PM | 27 SEP 2024
0.9 (0.54%)

Bharat Electronics share price

293.35
03:57 PM | 27 SEP 2024
3 (1.03%)

Bharat Petroleum Corporation share price

367.30
03:57 PM | 27 SEP 2024
22.2 (6.43%)
More Active Stocks

Market Snapshot

  • Top Gainers
  • Top Losers
  • 52 Week High

Balrampur Chini Mills share price

654.85
03:50 PM | 27 SEP 2024
42.35 (6.91%)

Kalpataru Projects International share price

1,405.90
03:52 PM | 27 SEP 2024
86.3 (6.54%)

Bharat Petroleum Corporation share price

367.30
03:57 PM | 27 SEP 2024
22.2 (6.43%)

Bombay Burmah Trading Corporation share price

2,859.40
03:41 PM | 27 SEP 2024
165.75 (6.15%)
More from Top Gainers

Recommended For You

    More Recommendations

    Gold Prices

    • 24K
    • 22K
    Bangalore
    77,415.00-60.00
    Chennai
    77,421.00-60.00
    Delhi
    77,573.00-60.00
    Kolkata
    77,425.00-60.00

    Fuel Price

    • Petrol
    • Diesel
    Bangalore
    102.86/L0.00
    Chennai
    100.75/L0.00
    Kolkata
    104.95/L0.00
    New Delhi
    94.72/L0.00

    Popular in Markets

      HomeMarketsPremiumInstant LoanMint Shorts