Market regulator Securities and Exchange Board of India (SEBI) on Monday said it would avoid regulatory turf wars while allowing mutual funds to launch pension products.
“We will avoid all turf wars (between regulators). After we get the stakeholder recommendation, we will go to the board and then take a final call,” SEBI Chairman U. K. Sinha told reporters here.
Discussion today
The SEBI Advisory Committee on Mutual Funds will meet on Tuesday to discuss the issue.
“SEBI will take a direction towards reviving the mutual fund interest in the country and some long- and medium-term measures will be contemplated (in the Advisory Committee meeting),” Mr. Sinha added.
While the mutual funds are regulated by SEBI, pension falls under the purview of Pension Fund Regulatory and Development Authority (PFRDA).
Earlier, the regulation of Unit-Linked Insurance Plans (ULIPs) created a turf war between SEBI and Insurance Regulatory and Development Authority (IRDA) forcing the Finance Ministry to intervene and resolve the issue. The mutual fund industry, which is going through a bad patch on account of declining investor interest, wants to launch pension products to attract retirement money. However, taxation and other regulatory issues are delaying the process.
The SEBI meeting comes close on the heels of Prime Minister Manmohan Singh’s statement last month that the MF industry is facing problems that needed to be resolved. SEBI has allowed the mutual fund industry to come out with pension schemes, and is in touch with the Finance Ministry to sort out the taxation issues.
The current provisions of the Income-tax Act make pension products of insurance companies eligible for tax deduction benefits. However, no such benefits are available for mutual fund schemes.
Industry experts said SEBI would have to modify regulations to enable mutual fund houses to launch pension schemes.
