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Reach out, go beyond top 15 cities, Sebi tells MFs

Press Trust of India / Mumbai 12 Oct 12 | 06:21 PM

Sebi today said the government and the regulator have done their bit to help the troubled mutual funds and now it is for the industry to take the reform measures forward.

"For the time-being, our task is over and its time for the industry to respond...We recently came up with new set of guidelines on mutual funds in our efforts to balance the need for attracting investment and help the industry," Sebi Chairman UK Sinha told a capital markets summit organised by Ficci here.

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"The industry has to go beyond top 15 cities and if you do so, then you will get good and sustained business," he added.

On the Sahara issue, Sinha refused to take questions saying the matter is sub-judice and Sebi will follow directions of the Supreme Court in letter and spirit.

Last month, the Sahara Group challenged a Supreme Court order which had asked it to refund Rs 24,000 crore to around three crore investors, to a larger bench.

The case pertains to a Sebi order last year in which it had asked the Lucknow-based company to refund the money it had collected from investors through optionally fully convertible debentures.

When asked about developing the secondary market, Sinha said the main concern of Sebi is on risk management.

"The regulator has come up with some set of guidelines on algo and high frequency trades and many countries have taken it as an ideal norm," he said.

On the almost dried up primary markets, he said there is a need to raise awareness about market in non-traditional market to enhance the reach.

Notably, due to credit crunch there has not been a single major IPO this fiscal so far.

About the poor response to the recently announced offer for sale (OFS) norms, he said only two-three companies have taken benefit of these norms.

On the minimum public shareholding, Sinha said, "I have been assured by the government that there will not be any extension of timeline for this. Some of the PSUs are also non-compliant and I have been assured that they will meet the public float norm within the specified time."

The government has set a minimum public holding of 25 per cent in all listed companies by next June. Many blue-chips, especially from the public sector space, have to bring down their stake to meet this new norm.

Following the norm, many MNCs have decided to delist from the domestic bourses. On this, the Sebi Chairman said, "My work at Sebi is to encourage more listing and more retail participation. Any problem with regard to delisting will be looked into. But I am not in favour of wholesale delisting."

When asked how will Sebi safeguard the interests of minority shareholders in companies which have not met the minimum public shareholding agreement, he said, "Sebi will b conscious of the fact that the interests of the minority shareholders are not compromised."

"I would like to remind that consequences of non-compliance of listing agreement or non-compliance of any rule, and this comes under the Securities Contracts (Regulation) Rules, can be severe," he added.

He also said the minimum public float norm is not unique to the country.

On corporate governance, he said, "we want to present ourselves to the world as an investment destination. For this, corporate governance standard should be increased continuously to achieve this."

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