AMFI Could Be Given More Autonomy

CII held an event "Indian Mutual Fund Industry: Emerging Opportunities and challenges" in Mumbai on June 20,2007. Mr. Shrinivas. V.Dempo, Chairman CII Western Region and Chairman and managing Director of V. S. Dempo Company said in his welcome address that the economic environment in India has changed over the past few years especially after the outsourcing boom. Continuously softening interest rates, rising inflation to go with the rising standard of living and meteoric rise in the equity markets meant that a new era of investing had evolved. "Mutual Fund investing has now don the economic growth story through the mutual fund route," he said.
Mr.U.K.Sinha, Chairman- CII Mutual Fund Summit, 2007, Chairman CII, National committee on mutual Funds and Chairman and Managing Director, UTI Asset Management Company said, "There is a need to work more to win the confidence of investor." He also said that mutual fund industry would be willing to cooperate with government. He pointed out the fact that growth of mutual fund industry has happened because of pension funds coming in. He further said that demating of mutual funds should be possible in coming years.

In an incisive address on Enabling Regulations- Enablers for Growth, the SEBI chairman raised the issue of excellent results that the mutual fund industry had been posting in recent times. " The MF industry seems to be prematurely patting itself on the back.," he said. Pointing out the 'liquid funds were not the only way to grow' the SEBI chairman said large fund from corporate houses invested in MFs could generate a possible conflict of interest. " Something more needs to be done to get more types of money into MFs." he said.

On the issue of Self-regulation, Mr. Damodaran recalled that AMFI had resisted earlier attempts to make it an SRO (Self Regulatory Organization). Now, with revised proposal which would give AMFI would more autonomy, he hoped AMFI would become the first SRO in the finance industry, " AMFI is uniquely positioned to provide regulation," he said adding that the industry setting up its own mechanism to deal with things that were going wrong was the challenge the industry needed to look at.

In response to industry suggestions for a "level playing field' Mr. Damodarn pointed out that similar products were launched by other segments of the financial industry, with a different set of regulators, and clearly, there was an apprehension of distortion. " issues have been raised, and are being sorted out," he said, adding that the MF industry would see a more visible level playing field.

The MF industry is doing a great, phenomenal job, with lots of products being introduced, he said. " Different classes of products, including those for smaller investors are being introduced," he observed. He referred to Gold and Real Estate funds as new products that were needed ' so that we don't become stagnant.'

A P Kurian, Chairman, Association of Mutual Funds in India said, "The proposal to make AMFI a self regulatory organization (SRO) will be based on a completely new model. It will be planned in a refreshingly different manner following not with the conventional model but a new architecture."