While equity mutual fund sales continue to disappoint, redemptions fall to their lowest in 52 months, resulting in a net inflow
For just the third time in the past 12 months, equity mutual fund schemes reported a net inflow of assets. Both equity mutual fund sales and equity mutual fund redemptions have fallen to their lowest since April 2009. In that month, equity funds registered a net ouflow of Rs106 crore with sales of Rs1,994 crore and redemptions which amounted to Rs2,100 crore. In August 2013, sales which have averaged around Rs3,500 crore over the last twelve months fell to Rs2,784 crore and redemptions which averaged Rs5,000 crore declined by more than half to Rs2,326 crore. With the volatile market conditions of the last one month investors must have been confused whether it was a good time to buy or sell.
In the three months from May 2013 to July 2013 these was a decline of 11.70 lakh folios, averaging a reduction of nearly 4 lakh folios a month. In August 2013, in line with the lower redemptions, the number of folios declined by 0.63 lakh to 3.17 crore folios.
Moneylife has been continuously highlighting the decline in number of folios. This along with the continuous outflow of assets is a major concern for the industry.
Investments in equity linked savings schemes (ELSS) showed an improvement with sales in the first five months of the financial year amounting to a total of Rs683 crores compared to Rs662 crore seen in the same period last year. Other equity oriented schemes disappointed with total sales amounting to just Rs14,333 crore in the five month period compared to Rs14,940 crore seen last year.
This is despite the fact that the regulator has taken steps to improve penetration of mutual fund schemes beyond the top 15 cities and has even introduced a direct plan with a lower expense ratio for investors, who wish to skip the distributor and invest directly. While the direct plan is the preferred route for corporates investing in liquid mutual fund schemes, this route has failed to lure investors to put their money in equity schemes.
SEBI's measures come at a time when concerns are being raised about outflows of foreign capital and weakening of the rupee against the dollar and other foreign currencies
Market regulator Securities and Exchange Board of India (SEBI) will soon notify new rules to make it easier for foreign entities to invest in Indian markets. SEBI's move follows finalisation of the necessary regulatory changes by the union government for a major overhaul of the existing regulations for overseas investments.
Under the new rules, which are likely to be announced in the next few days, SEBI is creating a new class of investors — to be called foreign portfolio investors (FPIs) and would classify them in three categories in line with their risk profile.
The know your client (KYC) and other regulatory compliance requirements for the FPIs would depend on their risk category and the norms would be easier for lower-risk investors.
The proposals are based on the report of KM Chandrasekhar Committee and were approved by SEBI in its board meeting in June. Thereafter, the regulator referred the recommendations to the union government for implementation.
SEBI is merging different classes of investors such as foreign institutional investors (FIIs), their sub-accounts and qualified foreign investors (QFIs) into a new category FPIs, to put in place a simplified and uniform set of entry norms for them.
The FPIs would be categorised into three categories — low-risk (for multilateral agencies, Government and other sovereign entities), moderate risk (for banks, asset management companies, investment trusts, insurers, pension funds and university funds) and high-risk (all the FPIs not included in the first two categories).
The third-category of FPIs would not be allowed to issue participatory notes.
The KYC requirements would be the simplest for the first category and most stringent for the third class.
The submission of personal identification documents of the designated officials of the FPIs would also be done away with for the first two categories.
These measures come at a time when concerns are being raised about outflows of foreign capital and weakening of the rupee against the dollar and other foreign currencies.
The new norms are expected to make it much easier for foreign investors to enter the country and make investment decisions.
The regulator had earlier sought certain changes in the provisions of the Prevention of Money Laundering Act, as also in the norms for taxation responsibility under the FPI regime, to facilitate the framing of new norms.
According to the new regulations, any portfolio investments would be defined as investment by any single investor or investor group if they do not exceed 10% of the equity of an Indian company.
Besides, any investment beyond the threshold of 10% would be considered as foreign direct investment (FDI).
The CIC remarked that it was a sad reflection on two of the most important offices in India if the knowledge of where the information is held is not available in both places. This is the 172nd in a series of important judgements given by former Central Information Commissioner Shailesh Gandhi that can be used or quoted in an RTI application
The Central Information Commission (CIC), while allowing an appeal, directed the Public Information Officers (PIOs) at the Prime Minister's Officer (PMO) and Ministry of External Affairs (MEA) to provide information about selection of media, expenses during the PM's foreign tour to BRICS Summit and Kazakhstan. The PIO at PMO simply forwarded the Right to Information (RTI) application to MEA, despite having available on its records the information sought by the applicant.
While giving the judgement on 13 December 2011, Shailesh Gandhi, the then Central Information Commissioner said, "If a government does not know where its information lies on such important matters it should be a cause of concern to everyone. The PIO of MEA is directed to transfer the relevant queries back to PIO of PMO. The PIO of PMO is directed to provide the information as per the available records to the appellant".
Gurgaon (Haryana) resident Aseem Takyar, on 18 April 2011, sought from the PIO information regarding selection process and expenses incurred for media persons during the Prime Minister's foreign tour to BRICS Summit and Kazakhstan. Here is the information he sought and the reply provided by the PIO under the RTI Act...
1. For the sake of transparency, provide information containing copies of all noting, decisions, and correspondences take place for choosing and ultimately selecting 'media persons' to accompany, Prime Minister of India recent official foreign tours for 'BRICS' Summit and 'Kazakhstan'.
PIO's reply—The selection of media representatives, who accompany the Prime Minister on his foreign tours, is undertaken by the Prime Minister's Office (PMO). XP Division (i.e. External Publicity Division) of the Ministry makes necessary logistical arrangements and also takes care of briefing the journalists.
2. Provide information as to what basis particular organisation and which empowered to finalise the whether any nomination solicited from media persons were short listed section or ministry of Government of above process. Who makes the necessary arrangement for the media?
PIO's reply—The selection of media representatives, who accompany the Prime Minister on his foreign tours, is undertaken by the Prime Minister's Office. XP Division of the Ministry of External Affairs (MEA) makes necessary logistical arrangements and also takes care of briefing the journalists.
3. Provide information regarding particulars of each media person accompanied both tours and cost of traveling, accommodation and other facilities, if any, for media persons, provided by which particular department.
PIO's reply—XP Division of the Ministry extends necessary facilitation to the media and takes care of briefings to ensure suitable coverage. Facilitation includes procurement of visas, media accreditation in host country, establishment of media centres, arranging hotel accommodation (paid for by journalists) and media briefings. The journalists travel on the VVIP flight, and they are not required to bear any travel cost. A list of the media persons accompanying Prime Minister on the twin visits to BRICS Summit and Kazakhstan is enclosed at Annexure.
Not satisfied with the PIO's reply, Takyar filed his first appeal. In his order, the First Appellate Authority (FAA), said, "The CPIO of the Ministry of External Affairs had responded to the applicant's letter of 18 March 2011 vide his letter no.RTI/551/361/2011 dated 3 June 2011 forwarding the information available with the Ministry of External Affairs. I am satisfied that the CPIO has forwarded the information requested by the applicant that is available with this Ministry".
Citing unsatisfactory reply from the PIO and FAA order, Takyar, the appellant approached the CIC with his second appeal.
During the hearing before Mr Gandhi, the then CIC, the PIO stated that the RTI application was originally filed with PMO, which was transferred to the MEA. This implies that the PMO did not hold the information and that the information is held by MEA.
The PIO of MEA categorically stated that he held some of the information, which has been provided to the appellant and the balance information should be with the PMO.
Mr Gandhi said, "The Bench feels that it is a sad reflection on two of the most important offices in India if the knowledge of where the information is held is not available in both places."
While allowing the appeal, he then directed the PIO of MEA to transfer the RTI Application back to the PMO mentioning the points on which points information would be with PMO. The PIO at PMO was directed to provide the information as per the available records to the Appellant as per the provisions of the RTI Act.
CENTRAL INFORMATION COMMISSION
Decision No. CIC/SG/A/2011/002605/16276
Appeal No. CIC/SG/A/2011/002605
Appellant : Aseem Takyar,
Udyog Vihar, Gurgaon, Haryana.
Respondent : Manish Chauhan
Public Information Officer & Director (RTI)
Ministry of External Affairs
619- Akbar Bhawan