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Sebi chairman U.K. Sinha in Mumbai on Thursday. (PTI)
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Mumbai, June 21: Concerned over the non-performance of some mutual fund schemes, Sebi today said it would probe the matter and might quiz the CEOs of these fund houses in this regard.
The capital market watchdog said funds performing poorly over a long period not only needed to answer to unit holders but also to the regulator.
“There are nine fund houses where over a period of three years, 50-100 per cent of their schemes have performed less than the scheme benchmark. Imagine if more than half of the schemes over a period of time and on continuous basis have been performing less than benchmark… There are another nine AMCs where less than half or up to 50 per cent of their schemes have performed below the scheme benchmark,” Sebi chairman U.K. Sinha told reporters on the sidelines of a CII meeting here.
“Sebi is considering questioning CEOs and fund managers of the mutual funds which have non-performing schemes over a long-term basis,” Sinha said and added that the market regulator would ask them what measures they were taking to address the issue.
A Price Waterhouse report says India’s 44 mutual funds offer 4,473 schemes. The number of schemes were 779 six years ago.
“Investors can opt out of a scheme for bad performance, but if it is happening on a continuous and long-term basis, for a significant percentage of the schemes, then it becomes a Sebi issue as well. So, we are going to engage those fund managers and CEOs about what measures they are proposing to take. We will perhaps review their performance on a half-yearly or annual basis,” the Sebi chief said.
Fund houses have welcomed Sebi’s decision to quiz the CEOs, saying it will increase their accountability.
According to Sinha, the market regulator has also come across instances where a few fund houses have violated norms. Investigations by Sebi have shown that some schemes have invested in the fixed deposit of a bank, which is itself a unit holder in the scheme.
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