A proposal by mutual funds to float realty schemes has split the board of the Securities and Exchange Board of India (Sebi).
According to sources familiar with the development, some board members have argued that since real estate is fairly illiquid and not securitised, mutual funds should not be allowed to invest in such assets.
Realty plans by mutual funds have been hanging fire for more than two years now.
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Late last year the regulator had told the mutual fund industry to script a comprehensive scheme for real estate funds before giving its approval.
While the Sebi board has already given an in-principle approval for the launch of such schemes, final clearance is awaited.
Industry sources said the clearance is being stalled by certain members of the board who are not convinced on the feasibility of the product.
Since real estate is not as liquid as equities or debt, such types of schemes have to be of a longer duration