'Keen to implement self-regulation for MFs'

The market regulator, Securities and Exchange Board of India (SEBI) on Thursday said that it was keen to implement self-regulation in the Rs 10 trillion mutual fund industry at the earliest and in pursuit, it will come out with new rules for distributors and advisors soon. 

SEBI Chairman U K Sinha told media persons on the sidelines of a Mutual Fund Summit here that “there is a demand for self-regulatory organisations (SROs) in the MF sector and we are very keen on that and are also hopeful of implementing the same soon.” He also said the regulator is finalising norms for distributors and investor advisors and they will be issued shortly. 

Although the idea of an SRO has been challenged in court, Sebi chief continued that he is hopeful of its implementation. The Financial Planning Supervisory Foundation (FPSF), where retired Supreme Court Justice BN Srikrishna is a director, has taken Sebi to court over the SRO matter. It contends a possible conflict of interest if an industry group that has been protecting the interests of MFs appoints a company as an SRO to regulate its distributors and agents. Srikrishna chaired the Financial Sector Legislative Reforms Commission, which recommended sweeping changes in financial sector regulations. 

Sinha also said pension funds should come into the mutual funds sector and tax benefits should be offered for investors in real estate investment trusts and infrastructure. The size of the pension market, estimated at over Rs 1.5 trillion in 2010, is expected to rise to over Rs 2 trillion in 2015 and over Rs 4 trillion by 2025. He pointed out that Sebi had asked the government to provide clarity on tax benefits for new products like REITs (real estate investment trusts) as also for infrastructure investment trusts and debt securities. “Sebi will soon finalise norms for REITs, but is awaiting clarity on taxation issues,” he said.