If the Sebi chief feels AMCs need to be better capitalised because customer acquisition costs in the mutual fund industry can be high, given they need to reach out to smaller towns and spend on advertising, that is a valid point. In fact, although the industry has been talking about stepping out beyond the tier-1 cities and spending on educating investors, not too much has happened, even though its possible plans are being rolled out. Also, while a bigger net worth does offer investors more comfort, theres not too much of a difference between R10 crore and R50 crore that a committee which revisited eligibility norms for AMCs a few years back believed it should be. For a global player or for a large Indian group, therefore, it wouldnt really make a difference. Capitalisation norms vary across the globe; the Japanese, for instance, dont ask for any minimum capital at all, while in the the US a small seed capital is all thats needed. The disadvantage of upping the entry barrier is that is keeps out boutique outfits, which can also play a meaningful role. But that then is more like running a portfolio management scheme as some have pointed out. More capital, however, is not going to help the MF space grow; that will happen only when distributors are incentivised.