The Securities and Exchange Board of India (Sebi) has formed a seven-member panel chaired by Prashant Saran, wholetime member, to examine the mutual fund sector’s grievances on the abolition of entry loads in August 2009. It had its first meeting on Friday.
A panel member said: “It’s very exploratory. A lot of people have complained about the transaction costs. This is making people disinterested and move out of the industry. So, the panel will look at ways to address these issues.” He said the findings are expected to come in a “few weeks.”
Two key issues it would examine are the twin cheque system and the common account statements introduced by Sebi, with the associated transaction costs.
To distinguish the payment made to the distributor for his services, Sebi had mandated this be done separately. And, the regulator had pushed for a common account statement.
“We made our stand clear to Amfi that there should be a single cheque payment system. Even after two years of entry load ban, the distributors are finding it difficult to charge investors for the advice. We believe an investor should give a single cheque to the AMC and mention (overleaf) how much commissions he/she wants to pay to the distributors. A double cheque system only adds to the confusion,” said a CEO of a mid-sized fund house.
Source: Business Standard