New MF rules balanced, offer certainty to industry: Amfi chairman

The asset managers’ industry lobby, Amfi, on Thursday termed Sebi’s revised rules for mutual funds as a balanced set that takes care of everybody’s interests.

Sundeep Sikka, the executive director and chief executive of Nippon India Mutual Fund, who also chairs the Association of Mutual Funds of India (Amfi), said the declaration of the final rules also gives certainty to the industry.

“Sebi has come out with a very balanced set of regulations after a wide-ranging consultation process which is positive for the MF investors and also fund houses,” Sikka told reporters here.

The Sebi board on Wednesday evening declared a new framework for the MF industry, which includes tweaks on the fees paid by the investors on their MF bets and also does away with a 7-year provision, helping the fund houses charge an additional 0.05 per cent as exit load.

It can be noted that there was widespread unease among investors in AMC stocks after Sebi had come out with a draft of the rules earlier this year. At the time of announcing the final rules, Sebi chairman Tuhin Kanta Pandey had said that the industry feedback has been taken on board, and the final rules are not as “radical” as the draft.

“As an industry, it gives us the certainty as the outcome of consultation paper will help in further growth and penetration of the Mutual Fund industry,” Sikka said.

Shares of the listed mutual funds rose in early trade on Thursday as the counters witnessed large-scale buying.

The capital markets regulator’s board decided to tweak the expense structures for the MF industry by introducing the concept of a base expense ratio (BER), which excludes statutory levies like security transaction tax and GST, which is a departure from the current system focused on total expense ratio (TER).

The concept of TER stays, and shall be the sum of the BER, brokerage, regulatory levies and statutory levies. Sebi chairman Tuhin Kanta Pandey told reporters that the taxes and levies vary from time to time and hence BER is a better way of looking at the expenses the industry charges.

The Sebi also declared a rationalisation of brokerage limits, cutting the cap of 0.12 per cent to 0.06 per cent, and cut the same for derivative transactions from 0.05 per cent to 0.02 per cent.

It also ended an additional 0.05 per cent additional exit load measure first introduced in 2018. Pandey said the new rules will be applicable from April 1 next year.