SEBI Proposes Easier Norms For Domestic Mutual Fund Managers

 Fund houses may be allowed to manage investments of Category I FPIs which includes central banks, government agencies, sovereign wealth funds and multilateral organizations and broad-based Category II FPIs such as mutual funds, university funds, pension funds, investment trusts, portfolio managers and banks, among others.

Earlier, asset management companies were allowed to undertake management and advisory activities for various verticals such as mutual funds, pooled assets including offshore funds, portfolio management services and advisory services. But, in 2011, in order to address the conflicts that were arising among these verticals, fund houses whose primary activity was to manage mutual funds were mandated to restrict their other activities in two buckets: management of funds of other broad-based entities and other activities like PMS and advisory services, while meeting separate regulatory requirements for each of these buckets. Rules do not allow for transactions in opposite directions i.e. buy and sell between the domestic and offshore fund.

SEBI had received suggestions from the market that there is a significant increase in the interests of global investors towards Indian capital markets and specifically in equity markets. Currently, a small proportion of FPI investment is being managed by fund houses. "Considering the long-term track record of Indian MFs, there is significant potential for the global capital being invested in India to be managed or advised by local mutual fund managers," said SEBI.

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