``The cheque writing facility for MMMFs has come at the right moment for PNB MF. If the approval comes soon, we will launch the MMMF with the two other funds on May 10. Otherwise, we will launch the MMMF separately at a later date. We have already written to Sebi to incorporate the cheque-writing facility in the highlights of the draft prospectus,'' said V K Joel, executive vice-president, PNB AMC. The MMMF, with a minimum investment of Rs 25,000, will have a lock-in of 15 days. Thus, investors can start writing cheques on their account after 15 days. ``MMMFs will help investors earn a higherreturn than their savings bank accounts,'' said Joel.

The AMC plans a 55 per cent equity exposure in the balanced fund to take advantage of the budgetary sop, which has made dividend payout tax-free from open-end funds. The minimum investment in the balanced fund is Rs 5000. The fund will invest in debt securities with at least AA rating, while 60 per cent of the equity investments will be in S&P CNX Nifty scrips. The fund will charge an exit load of 1.5 per cent if the units are redeemed within one year.

The open-end debt fund has a minimum investment of Rs 5000 with an exit load of 0.2 per cent, if investments are withdrawn within 180 days. The AMC plans to aggressively market the fund as a superior alternative to RBI's tax relief bonds which assure a return of 9 per cent. The income from debt funds has also been made tax-free in the hands of investors. ``An open-end debt fund can easily generate a return in excess of 12 per cent with safe investments even in the current interest rate scenario. Evenafter the 10 per cent tax on dividend outgo, investors will get a far superior yield on the debt fund. Second, liquidity is instant while there is no secondary market for tax relief bonds,'' said Joel.

The last scheme from PNB Mutual Fund was the equity-linked savings scheme launched in 1996. Since then, the AMC has not launched any new schemes, but concentrated on restructuring the protfolios of its existing schemes. ``We have aggressively churned the portfolios of our equity funds and have moved in the three growth sectors of IT, pharma and FMCG while manitaining some expsoure in the core sectors. The impact of the restructuring will reflect in NAVs when the market picks up,'' said Joel. ``We believe that the worst phase for the fund industry is now over and the sector is poised to witness a healthy growth in years to come. The government is also looking very favourably at the fund industry, which is reflected in its policy announcements,'' pointed out Joel. ``With interest rate cuts, spreads of thebanking industry have come under pressure which is a clear sign that banks will have to look at avenues for revenue generation other than savings bank accounts. This money from savings accounts should begin to move into mutual funds,'' he added.