The committee is headed by Tata Asset Management managing director KN Atmaramani.

Under this plan, as is followed in the US, employees make regular, pre-tax contributions through pay roll deductions. This contribution permits employees to reduce their taxable income each year. The investment is also exempted from income-tax for that particular year when the investment is made. These contributions are held in the employee's account until retirement, separation from service or some other specified events.

Such schemes are targeted at employees who do not have any regular income after retirement. In the US, assets worth more than $1 trillion are held in these type of schemes. According to KN Atmaramani, ``Such schemes have become the need of the hour in India as people at the old age here do not have a steady source of income.''

Amfi has recommended some major steps to take the Indian mutual fund industry at par with its international peers. Amfi has also formulated a committee to recognise, provide and disclose non-performing assets (NPAs) of MFs. According to the committee, if income is not received after the expiry of the first quarter from the due date, no further accrual of income will be done and the asset will be identified as an NPA. If income is not received for quarter past due date, the entire income accrued upto that date should be provided. The provision for NPA will be made in a phased manner so that the entire value of the NPA shall be provided within 18 months past due date of income or earlier at the discretion of the fund.

The disclosure will be by way of a note to the balance sheet giving total quantum of NPAs and their proportion to the total portfolio of the fund. The committee has forwarded these recommendations to Sebi. There is a suggestion that the board of trustees may constitute an audit committee of the trustees which will review the internal audit systems and formation of a valuation committee by the AMC.

Sales for mutual funds for the month of October accounted for Rs 3939 crore of which 40 per cent accounted for income schemes. Of the total of 301 schemes, 94 income schemes collected Rs 1543 crore as compared to 98 equity schemes which collected Rs 775 crore.

This takes the total assets under management for all mutual funds to Rs 86,949 crore. Of this almost 50 per cent belongs to income schemes, 26 per cent to balanced schemes and only 20 per cent for equity schemes.