Market regulator Sebi’s interim measure to allow launch of two new schemes in a year by fund houses with networth below Rs 50 crore has come as a major relief for small players, industry representatives said.
In February, Sebi set minimum networth threshold for fund houses at Rs 50 crore and asked the existing players to comply with these norms within three years.
At that time, 19 fund houses had networth below this threshold, but a few of them have since complied with the requirement by increasing their networth to desired level.
To help the non-compliant fund houses in the interim period, Sebi has now allowed such entities to launch two new schemes in a year.
The move will help small players like Taurus MF, Parag Parikh Financial Advisory Services MF, Escorts MF, Sahara MF and Quantum Asset Management Company to launch new schemes.
According to industry experts, Sebi had received offer documents from many of these fund houses to launch new schemes, but their plans could not go ahead.
While relaxing the norms, Sebi has said that it would allow two new schemes in a year on a case-to-case basis, depending on such asset management companies (AMCs) demonstrating that serious efforts are being made by them to meet the net worth requirements within prescribed timelines.
The move will help in many small fund houses approaching the regulator for launch of new schemes, while it will also help them in garnering money.
“It is a welcome step from Sebi, it will help small players to launch new schemes. I think players, which have significant presence and are confident of meeting the requirement networth, will able to garner money,” Axis Mutual Fund MD and CEO Chandresh Nigam said.
LIC Nomura Mutual Fund Chief Executive Officer Nilesh Sathe said: “The new products can be maximum two with lot of caveats. It gives a clear indication that the AMCs need to have minimum Rs 50 crore net worth as soon as possible.
“I think there are over 10 existing AMCs who have deficiency in net worth.”
Another industry representative Jimmy Patel CEO Quantum AMC said: “It is a breather for small player but there is caveat so it will not be easy. We expect small players approaching Sebi for launch of NFOs.”
The regulator hiked the minimum net worth requirement for mutual funds in February to Rs 50 crore, from Rs 10 crore, in a move to weed out non-serious players and to ensure stability of the financial system. The fund houses have been given three years to comply with regulation.
