Watchdog stresses on self-regulation by mutual funds
SEBI chief M Damodaran says Indian mutual funds do not entirely deserve the self-praise they have been indulging in and must look at other options.business Updated: Jun 20, 2007 16:00 IST
Indian mutual funds do not entirely deserve the self-praise they have been indulging in and must look at other options to grow than rely on inflows from companies, the markets watchdog chief said on Wednesday.
"The mutual fund industry seems to be prematurely patting itself on the back," M Damodaran, chairperson of the Securities and Exchange Board of India (SEBI), said at a seminar organised by the Confederation of Indian Industry (CII) in Mumbai.
"The question is: Who has made what sort of growth? The numbers provoke more questions than provide answers," Damodaran said, adding that large investments by corporate houses in mutual funds could generate conflict of interest.
On the issue of self-regulation in the industry, Damodaran said the Association of Mutual Funds in India (Asmfi) had been resisting attempts to become such an organisation. Finance Minister P Chidambaram had made the proposal last year.
"The Association of Mutual Funds in India is uniquely positioned to provide regulation," he said, adding that the industry needed to look at the challenge of setting up its own mechanism to deal with things that were going wrong.
Damodaran said the watchdog would be convening a meeting of trustees of mutual funds to remind them of their duties. "This is an industry which operates on trust. If trustees don't measure up, something is amiss," he said.
He also said that investor education would be the prime focus of the regulator this year. "By early July, the corpus fund for the National Investor Education Programme would be in place, and the mutual fund industry is a natural ally."