SEBI new guidelines for the mutual fund industry.. July 28, 2011

July 28, 2011

Market regulator SEBI today announced new guidelines for the mutual fund industry. New investors will now have to pay an additional Rs 150 for investment of Rs 10,000 and above in mutual funds, while the existing investors will be charged Rs 100 as transaction fees, For investments up to Rs 10,000, there will be no transaction charge. For a new customer, there will be a fee of Rs 150, additional amount of Rs 50 can be charged from first time Mutual Fund investor, Transaction fees would be imposed on transactions other than purchases/subscriptions relating to new inflows, and direct transactions with the Mutual Fund. Investors, who take the systematic investment plan (Sip) will also have to make a one-time payment of Rs 100 (recoverable in three or four installments).

As per the Sebi chairman UK Sinha, "It [transaction fee] is some way to compensate the distributors, who may have lost interest in the distribution of mutual fund products. The idea is that distributors have to be incentivised," Sebi’s steps are in the right direction in recognizing the role of the distributor.


Uniform KYC Process There will be only one Know Your Customer (KYC) requirement for transaction with all intermediaries, regulated by Sebi. It was also decided that Unique Identification Document (UID) number will be included in the eligible documents that can be presented as an identification of the customer as part of the KYC process.

"We want to come with uniform and simple KYC regulation [and] for this, we will set up KYC regulation authority...This will help in creating inter-connectivity between different market segments," Sebi Chairman UK Sinha told reporters after its board meeting.