Securities and Exchange Board of India (SEBI) chairman UK Sinha on Wednesday warned of regulatory action against mutual fund companies that fail to reach out to semi-urban and rural areas.
“We have given very reasonable incentives to the AMCs (asset management companies) for going beyond the top 15 cities,” Sinha said at a CII-organised MF summit in Mumbai on Wednesday. “I am sure that in the new MF policy we are going to have disincentives for those who do not meet this requirement.”
The Indian mutual fund industry is yet to spread its reach beyond the major cities. The top five cities contribute to 74% of the pie, with the remaining 26 per cent distributed among other cities.
“If you want to be an MF player, you have to be serious. Serious means you have to commit capital… So some sort of regulatory disincentives to meet the larger legislative intent is needed for those who are not serious,” Sinha said.
He added that the regulator has appointed a committee on this matter, which will submit its report in two to three months.
Fund houses have been urged to use technology to spread their footprint beyond cities.