In order to promote the sagging mutual fund industry, Finance Ministry may advise market regulator SEBI to consider re-introducing commission for brokers, known as entry load.
“We will meet representatives of mutual fund industry and SEBI officials (on Monday) and will advise them to consider measures including re-introduction of entry load to revive the fortunes of mutual fund industry," a senior finance ministry official said.
Entry load — 2.25% commission paid to distributors of mutual funds — was banned in 2009 by former SEBI chief CB Bhave, who felt that investors were being taken for a ride by distributors who encouraged investors to churn their portfolios. The ban, however, led to drying up of investments.
The Mutual Fund Advisory Committee of SEBI is scheduled to meet on July 17 and may take a call on the issue.