The Securities and Exchange Board of India (Sebi) plans to tighten norms for distribution of mutual funds to rein in mis-selling. The regulator will review the examination and certification process, which is currently under the Association of Mutual Funds in India (Amfi).
Speaking at a Ficci event, Sebi Executive Director KN Vaidyanathan said distributors needed to be regulated and made to focus on right-selling. “We are tightening the certification process. The distributor examination is going to move to National Institute of Securities Management. They will run it online from May or June. We are going to draw a distinction between passing an examination and certification,” said Vaidyanathan.
“We will focus on right-selling. You cannot accuse someone of mis-selling, unless you teach a person right-selling,” he said.
The regulator, while pulling up asset management companies for not moving beyond top cities, said it was “shocked” to see that fund houses had not informed investors about the ban on entry load. “Not a single fund house wrote to investors that the ban on entry load is good,” said Vaidyanathan, adding that profitability of fund houses had gone up after the ban.
“If you look at the nine months ended December 2009, profits of some fund houses have risen two to three times,” said Vaidyanathan.
