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As many as 33 mutual fund houses were found to have violated '20-25 rule' which requires a minimum of 20 investors and a cap of 25 per cent investment by an individual investor in a particular scheme, Parliament was informed today.
Large-scale violations in several schemes of such fund houses were found by capital markets regulator Sebi.
"Letters were issued to 33 mutual funds, wherein individual unit holders were observed holding more than 25 per cent of the scheme's quarterly average net assets," Minister of State for Finance Nirmala Sitharaman said in a written reply to the Rajya Sabha.
She advised them to comply with 20-25 norms in "letter as well as in spirit".
The fund houses were also advised to strengthen the system and improve the compliance standards to avoid recurrence of such instances, failing which penal actions would be taken in accordance with the provisions of Sebi regulations.
As per the norms, every MF scheme needs to have a minimum of 20 investors, while one single investor can not account for more than 25 per cent of total assets managed by that scheme.
Currently, there are about 45 fund houses in the country, which together manage assets worth about Rs 10 lakh crore.
Sebi monitors the bi-monthly compliance reports and half yearly trustee reports being submitted by Asset Management Companies (AMC) and Trustees respectively to the regulators.
