Sebi had banned MF houses from charging entry-load on their schemes since August 1, 2009. Before this, distributors were getting 2.5 per cent commission from the MF houses when investors purchased such schemes, called entry-load.
The load account balances of MFs would now reflect the balance as on July 31, 2009, while the other would reflect accretions since August 1, 2009. Experts said the Sebi circular would give clarity to the fund houses regarding usage of load account balances of schemes that were launched before the entry load ban. Fund houses cannot utilise more than one-third of the balances in the load account as on July 31, 2009, in one financial year.
“...The unutilised balances can be carried forward, yet in no financial year the total spending can be more than one-third of the load balances on July 31, 2009,” Sebi said. However, MFs would have freedom to use the accretions in the load account, post the entry load ban since August 1, 2009. Fund houses can use the balances in such accounts for meeting marketing and selling expenses.