AP Kurian, chairman of Association of Mutual Funds in India, said the association has got permission from the government to exempt PAN card requirement for such investments and a notification in this regard is expected.
This means for systematic investment plans (SIPs) up to Rs 50,000, the investors do not need to produce their permanent acccount number issued by the income tax department. They are now exempt from the Sebi rule that came into effect from June 2007.
Sebi chairman CP Bhave said mutual funds should work to increase their retail participation instead of depending on corporate funds. A higher percentage of assets under management (of mutual funds)) must come from retail. Last year was a tough year for the mutual fund industry and the redemption pressure (on them) came mainly from corporates, he said.
Kurien said the exemption for retail investors was a good thing that will help the industry to grow. However, MF players do not see any dramatic expansion in the asset base due to this. Sandesh Kirkire, chief executive officer of Kotak Mahindra Asset Management Company, said, I dont think it will make much of a difference to the mutual fund industry, as now those who invest in MF have PAN cards. However, it will be beneficial to the small investors to enter the mutual fund.
Industry experts reckon that this move will impact the non-metro areas more than the metros. This is a positive step, however, we do not see a dramatic improvement in collections due to this. However, this willl help in penetrating tier-II and tier-III cities, said K Venkatesh, national head, distribution, Geojit BNP Paribas.