PAN relief for SIP up to Rs 50,000

Mutual fund investors would now be exempt from furnishing their Permanent Account Number for investments in systematic investment plans of mutual funds up to Rs 50,000, the Association of Mutual Funds in India (AMFI) Chairman, Mr A.P. Kurian, said.
“We are waiting for the official notification from the Government but the proposal has been approved,” said Mr Kurian, speaking on the sidelines of the Mutual Fund Summit 2009 organised by CII.
It is high time for harmonisation of the statutory and regulatory provisions with respect to the mutual fund industry, Mr Kurian said.
The industry is expected to record 150 million folios by 2015 from 48 million, Mr Kurian said. The industry added 10 million folios a year between 2005 and 2008 but the number declined to a mere 3 million in 2008-09, he added.

Significant growth

The CII-KPMG Report on the Indian mutual fund industry, which was released at the summit, states that investment in mutual funds comprised 7.7 per cent of the gross household financial savings in FY 2008, a significant increase from 1.2 per cent in FY 2004. The report mentions that the households continue to hold 55 per cent of their savings in bank fixed deposits, 18 per cent in insurance and 10 per cent in currency as of FY 2008.
The industry is likely to continue to grow 15-25 per cent over the next five years based on the pace of economic growth, the KPMG report stated. In the event of a relatively slower economic revival, the industry may grow 15-18 per cent over the next five years, the report said.
“Industry profitability may reduce further as revenues of asset management companies shrink due to focus on low-margin products to attract risk-averse investors, and also as operating costs escalate due to the focus on penetrating retail population beyond tier-2 cities and operating costs escalate,” said the report..
Panellists at the summit stressed on the need for creating and selling simple products. “We need to sell products which can be explained to an investor in about five to six lines,” said Mr Milind Barve, Managing Director, HDFC AMC.
“There are more than 900 schemes, so simplification would help,” said Mr Dhirendra Kumar, CEO of Value Research.

Source: http://www.thehindubusinessline.com/2009/06/18/stories/2009061851971000.htm

Focus more on retail investors, MFs told

Asking mutual fund industry to stick-on to know-your-customer (KYC) norms by implementing them in letter and spirit, the Securities Exchange Board of India (SEBI) Chairman, C. B. Bhave, on Wednesday said that increased focus on retail investors was the key to the growth of the mutual fund industry.
“If the mutual fund industry wants diversity, importance of non-corporate investors should be realised. It is in the interest of the industry to have increased investor participation,” said Mr. Bhave. He was speaking at the Fifth CII Mutual Fund Summit-2009 on “Indian mutual fund industry — the future in a dynamic environment” organised by Confederation of Indian Industry (CII) here.
The SEBI chief said though the mutual fund industry had passed unscathed in the recent global crisis, there were certain issues, particularly in the way liquid schemes of mutual funds were structured, which need to be tackled. He said that in the case of fixed maturity plan schemes, mutual fund houses should refrain from offering securities which were fixed but whose underlying assets were beyond the tenure of those securities. While replying to the industry’s concern on the issue of KYC norms, Mr. Bhave said that KYC was not difficult but a requirement in the interest of the investor and the industry as a whole. He said that while distribution commission on insurance products was larger than on mutual fund products, it was for the industry players to educate the investors of the cost implications and returns in both kinds of products and thereby generate greater volumes. Earlier in his welcome remarks Arun Nanda, Deputy Chairman, CII Western Region, said that the mutual fund industry was still at its nascent stage and collaborative efforts for growth were essential. He also highlighted the role of the retail investor by saying that though India had close to 39 per cent savings rate, the retail side was quite untapped by the industry.
The summit also witnessed the release of CII-KPMG report on Indian mutual fund industry — the future in a dynamic environment. While assessing the current state of the mutual fund industry, the report laid down the challenges of low customer awareness, financial literacy and limited retail penetration among others for the growth of the industry.
PTI reports from Delhi:

Anchor investors
With not many initial public offerings (IPOs) hitting the market, SEBI may on Thursday assess whether a new entity, named anchor investors, be allowed to take part in the public offers to boost the sagging primary market.
The SEBI board is likely to discuss the issue of anchor investors threadbare to spur the IPO market, official sources said here.
Anchor investors (AI) are long term investors and if the IPO issuer can find anchor investors, it indicates that the company enjoys good reputation and its public offer could be a success.
An AI would be required to pay a margin of 25 per cent on application with the balance 75 per cent to be paid within two days of the date of closure of the issue. AI would be asked to bring in the additional amount if the price fixed for IPO is higher than that paid by this new form of entity. As per the proposal to be discussed by the SEBI board, 30 per cent of the portion for qualified institutional buyers in an IPO will be reserved for anchor investors. At present, 50 per cent of the IPO size is reserved for qualified institutional buyers.

Source: http://www.hindu.com/2009/06/18/stories/2009061855961600.htm