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SEBI staying put on MF entry load

business Updated: May 10, 2011 20:28 IST
Sandeep Singh
Sandeep Singh
Hindustan Times
Highlight Story

The Securities and Exchange Board of India (SEBI) does not plan to reintroduce “loads” — the amount charged by mutual funds to cover marketing expenses — said a member of a committee formed by SEBI on the condition of anonymity. The committee was formed by the market regulator to explore solutions that can help the mutual fund industry grow.

The entry load was paid upfront to the distributors and agents from the investor investment component. The load stood at 2.25% for equity schemes. It was banned in 2009 by SEBI. If investors want to pay to the distributor they have to pay it separately for the service offered.

The committee, which has met once and asked members to come up with solutions for the next meeting, will meet again on Friday to discuss the same.

“Entry load is not negotiable and there is no question of a reversal on the same,” said the member. “The committee discussed on solutions that take mutual funds to smaller locations and to investors there.”

Earlier, speaking to Hindustan Times when he took over as the chairman of the Association of Mutual Funds (AMFI), UK Sinha had said that he would work with the regulator to come up with solutions for the mutual fund industry. Now as the SEBI chairman, Sinha seems to be acting on the same.

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