Indian MF industry is sophisticated: Bajpai

Mumbai Nov 29 | Updated: Nov 30 2004, 05:31am hrs
At a time when India is fast becoming an attractive investment destination for non-duration global giants like California Public Employees Retirement System (CalPERS), what are its implications for Indias nascent mutual fund industry

The capital market regulator Securities and Exchange Board of India (Sebi) feels that the domestic mutual fund industry, in spite of its small size compared with global peers, is very technology-savvy and sophisticated. Speaking at the Funds World

India 2004, orgainsed in India as part of the Global Fund World series of seminars on Monday, Sebi chairman GN Bajpai said, Despite its relatively small size and penetration, the MF industry is sophisticated and successful.

Mr Bajpai hinted that norms pertaining to hedge funds would possibly be finalised in early 2005. We are closely examining the possibilities of providing FII status to hedge funds in India and are close to the finalisation of norms, he said.

The market regulator, Mr Bajpai said, has carried out a number of studies for the betterment of the MF industry and has formulated regulations to encourage investors to enter the capital markets via the MF route.

Mr Bajpai mentioned that Sebi was also exploring the options of replacing the existing trustee companies or, in a few cases, individual trustees with professional trustee companies (PTCs).

PTCs are wholly independent of the asset management companies (AMC) and their promoters, and will have the necessary infrastructure and expertise to supervise their AMCs on a continous basis and in a more professional way.

Mr Bajpai emphasised that the onus was not on the regulator alone to bring about reforms in the MF industry.

He said that it was the regulator and the fund managers who had to work in collaboration to bring about the much- needed retail penetration in the country.

He said that effective innovation of products, freedom of operation and minimisation of risks are the few key areas where Sebi and the MF industry must carry their work forward.