The Rs 38 trillion Indian mutual funds industry is in a sort of a fix. It cannot launch any new fund offers (NFO) till July 1, the deadline that the capital market regulator, Securities and Exchange Board of India (SEBI) has fixed for the industry to put into place an alternative to accepting money through pool accounts; the system prevalent so far. After the last deadline of April 1 was breached, SEBI came down hard. While it extended the deadline, it put a ban on NFOs till the mechanism is put in place. Large mutual funds had several mega-NFOs in last financial year, collecting record inflows. All that has come to a halt, even if temporarily. And it’s not just on the equities side; fund houses are missing out on launching debt funds, as well. With 10-year government security yield having risen to around 7.3 percent, up from 5.97 percent in May 2021, many experts believe this is the right time for fixed maturity plans and target maturity funds. But with a ban in NFOs, mutual funds cannot launch any of these schemes. When some MF industry officials approached SEBI unofficially to seek guidance, they were told to get a letter from the Association from Mutual Funds of India (AMFI; the MF industry’s trade body) petitioning for the cause. When they approached a senior AMFI board member- again very informally- he expressed deep reservation at approaching the SEBI top brass for further leeway. The wait continues.
