(a) the details of the provisions to protect the interests of mutual funds investors;
(b) the safety provisions made keeping in view the incidents of bungling with regard to
mutual funds worldwide;
(c) the role of Government banks in these mutual funds;
(d) whether the Government banks have been assigned the task of collection of mutual
fund; and
(e) if so, the reasons therefor?
MINISTER OF STATE IN THE MINISTRY OP FINANCE (SHRI NAMO NARAIN MEENA)
(a): Mutual Funds are regulated under the Securities and Exchange Board of India (SEBI)
(Mutual Funds) Regulations 1996 and various circulars issued thereunder. These protect the
interests of the investors. Important initiatives taken by SEBI in the recent past in this
regard include the following:
# abolition of entry load,
# ensuring parity among all classes of unit holders for exit load, permitting units of
mutual funds schemes to be transacted through registered stock brokers of recognised stock
exchanges,
# ensuring prominent display of standard warning of risk factors in audio visual and print
media, and;
# mandating system audit of mutual funds, disclosure of annual reports
and investor complaints received by mutual funds on their websites.
(b); SEBI (Mutual Funds) Regulations, 1996 and guidelines issued thereunder contain provisions
for the safety of investments. The important provisions in this regard include the following:
# prohibiting acquisition of assets which results in assumption of liability or
encumbrance of mutual funds assets,
# prohibiting mutual funds to make or guarantee loans,
# requiring trustees to ensure that Asset Management Companies(AMCs) exercise due
diligence in managing investments,
# requiring AMCs to ensure that all financial transactions are done through banking
channels,and ;
# requiring mutual funds to compute and carry out valuation of its investments and
publish the same according to prescribed norms.
(c): Some Government banks also sponsor, distribute and invest in mutual funds,
(d); Twenty Seven public sector banks are also distributors of mutual funds,
(e): The decision to act as distributors of mutual funds is a commercial decision taken
by managements of banks.