HDFC bags first Crisil governance rating

Rating agency, CRISIL has assigned India's first fund governance and process quality rating (Fund House Rating) to HDFC Asset Management Company. The fund house has been rated as 'Level 1' by CRISIL.

The CRISIL Fund House ratings are the first to focus on larger issues, offering a comprehensive view of an AMC's operations.

"Fund House ratings provide a comprehensive framework to assess governance and process-related aspects in an AMC," says Roopa Kudwa, executive director and chief rating officer, CRISIL.

Fund House ratings involves a detailed assessment of all aspects of an AMC's functioning, involving organizational structure, coprporate governance, investment processes, risk management practices, operational processes and selling and client servicing practices.

According to Milind Barve, managing director of HDFC Mutual Fund, there was no parameter to measure how an asset management company (AMC) is run across all functions till now.

"There was less stress on governance issues of asset management companies. CRISIL's new rating should put things in a better perspective. More so, because it is not a quantitative assessment, but a qualitative one. I am sure in the long run, investors will also take into account the qualitative aspects of how a fund is managed," adds Barve.

HDFC Mutual fund is the second largest player in the private sector and third biggest overall, in terms of assets under management (AUM) with Rs 18601 crore as on October 31, 2005.

UTI Mutual Fund leads the table with a total AUM of Rs 24935 crore, while Prudential ICICI Mutual Fund is the biggest player in the private sector with Rs 20426 crore.