SEBI notifies mutual fund reforms; changes to be effective from October

The changes, which would come into effect from next month, allows fund houses to charge investment and advisory fees on their schemes and levy brokerage and transaction costs

New Delhi: Market regulator Securities and Exchange Board of India (SEBI) on Wednesday notified wide-ranging reforms for mutual fund sector in India, which would provide incentives to fund houses for expanding to small cities but might result in additional costs for investors, reports PTI.
The changes, which would come into effect from next month, would require fund houses to make half-yearly financial results within one month of the end of every six-month period, SEBI said in a notification.
The decisions were approved by SEBI's board in its last meeting on 16th August with an aim to re-energise the mutual fund industry, by expanding its distribution network among other steps.
Notifying the proposals approved by its board, SEBI said on Wednesday that the fund houses might charge investment and advisory fees on their schemes, which would have to be fully disclosed in the offer document.
In case of a fund of funds scheme, the total expenses of levied on the scheme would be capped at 2.50% of the daily net assets of the scheme.
In addition to the total expenses already levied on schemes, SEBI would allow the fund houses to levy brokerage and transaction costs, which is incurred for the purpose of execution of trade and is included in the cost of investment, with a ceiling of 0.12% in case of cash market and 0.05% in case of derivatives transactions.
Besides, mutual funds can charge additional expenses of up to 0.30% of daily net assets, if the new inflows from places other than top-15 cities are 30% of the gross new inflows in the scheme, or are 15% of the average assets under management (year to date) of the scheme, whichever is higher. .
SEBI further said that the expenses charged under these clauses would have to be utilised for distribution expenses incurred for bringing inflows from such cities, and the amount incurred as expense on account of inflows from such cities would have to be credited back to the scheme in case the said inflows are redeemed within a period of one year.
Among other measures, the fund houses would have to calculate the Net Asset Value (NAV) of the scheme on daily basis and publish the same in at least two daily newspapers with nation-wide circulation.
Also, any exit load charged by the fund houses would have to be credited back to the scheme.
This measure, along with capping of the total additional expenses at 0.2% in normal case, would encourage long term holding and to reduce churn and align the interests of the fund houses and distributors with that of the investors.
These particular steps would not result in any additional cost to the investors, but the provision for additional expenses of up to 0.3% for inflows from smaller cities could make the investments costlier at the investors' end.
SEBI's board has approved certain additional proposals for mutual funds, including for regulation of distributions and for allowing cash transactions of up to Rs20,000 without PAN requirement, which are expected to be notified later.


Indian political parties fear RTI consequences; skip CIC hearing

On being asked questions through RTI on their largest donors and the manner of these donations by the Association for Democratic Reforms, all national political parties except for CPI declined to give the information

The thick skin of most of major political parties towards transparency and information dissemination was revealed yet again on Wednesday, 26th September, when most of them boycotted the hearing of the Central Information Commission (CIC) on the issue of whether political parties come under Right to Information (RTI). The full bench of the CIC comprising Satyananda Mishtra, Annupurna Dixit and ML Sharma was forced to keep the matter pending as only NCP and CPI were represented at the hearing, in the appeal made by RTI applicants Anil Bairwal and Subhas Chandra Agarwal. The CIC bench has given the general secretaries of the political parties one more chance to be present at the hearing, the date of which will be soon announced.


The CIC had asked the general secretaries of the All India Congress Committee, Bharatiya Janata Party, Communist Party of India (Marxist), Communist Party of India, Nationalist Congress Party (NCP), Bahujan Samaj Party and Public Information Officer of the Election Commission of India to be present for the hearing on Wednesday. It had stated in its notice sent to all of them on 10th September that “the Commission has received three complaints—one from Anil Bairwal and two from Subhas Chandra Agarwal—against the various political parties for not supplying/for supplying incomplete information under the RTI Act, 2005. Some of the political parties in their replies to the complainants have claimed that they are not a “Public Authority” and as such they are not covered by the RTI Act 2005. Since the issues involved are serious and the decision in these cases can have wider implications, the commission has decided to place these cases before a Full Bench…’’


After the Association for Democratic Reforms’ (ADR) RTI application to the political parties in 2010, only the general secretary of the CPI, AB Bardhan replied that: “a) Yes. We are Public Authority under Section 2 (h)(d)(ii) “non-government organisation substantially financed, directly or indirectly by funds provided by the appropriate government; and b) we have our internal appellate authority ‘Central Control Commission.’ The CPI also promptly provided a list of their largest donors, their addresses and the mode of payment of these donations.


Motilal Vora, general secretary of the All India Congress Committee replied that “…since the AICC does not come under the RTI Act your application along with postal order for Rs10 is returned herewith.’’ Hari Singh Kang, general secretary of CPI (M) replied that: “we are not a ‘Public Authority’ as per the provisions of the RTI Act. Hence, we are under no obligation to provide information sought for.’’ The BJP did not even bother to send a reply. Neither did BSP. NCP replied but said that it didn’t have enough man-power to provide the information asked for.


The information sought by ADR from the political parties was: “Sources of the 10 maximum voluntary contributions received by your party from financial year 2004-05 to financial year 2009-10; the modes of these donations (cheque, cash, DD, etc); the amount of these donations; the financial years in which these contributions were made; and sources/names of voluntary contributors along with their addresses who have made single contributions of more than Rs1 lakh to your party from financial year 2004-05 to financial year 2009-10.”


In July 2012, the ADR received information under the RTI Act, regarding the income and assets of six national parties and 36 regional political parties from the Election Commission and Income Tax authorities across the country.  It had also simultaneously filed RTI applications to each of these political party offices seeking information from the six national parties, a list of the names of the donors and modes of payments of these donations. Both these RTI applications (the one to the EC and income tax authorities as well as to the political party offices) were filed in 2010. It has taken one and a half year for the bench of the CIC to call for the hearing.


Anil Bairwal, national co-ordinator for ADR who is crusading for making political party donations transparent elaborates on why they come under RTI Act since they are ‘substantially’’ financed by the government. He states: “It is common knowledge that the political parties get lot of benefits and facilities from various government departments. Political parties get substantially financed by a very large amount by getting tax exemption on all their income. In addition, all the major political parties have been also provided facilities for residential and official use by Directorate of Estates (DoE). They have been given offices and accommodations at prime locations like Akbar road, Raisina Road, Chanakyapuri, etc and are charged only a token of money as rent or dues. These facilities are not just provided to them at marginal rates but their maintenance, upgradation, modernisation, renovation and construction is also done at state expense. A large amount of money is also spent by Election Commission of India on political parties for giving electoral rolls.’’


He further states: “Doordarshan and AIR also provide free broadcast facilities to the political parties. If closely seen, the money spent on that basis actually runs in crores of rupees. State funding is also given for publicity of political parties during elections. It is indeed very surprising that the political parties who at one end claim to work under transparent and people-centric manner have flatly refused to work in such a fashion.’’


The press release of ADR stated that: “the leaders of all political parties publically maintain that they are committed to transparency and probity in the functioning of political parties. However, when it comes to the implementation, their behavior is completely opposite. These replies bring to the fore the biggest

farce that our democracy is plagued with—the opaque functioning of political parties with no space for engagement with the citizens and no willingness to open themselves to public scrutiny.’’


Association for Democratic Reforms and National Election Watch in 2008 had also won the CIC judgement making I-T returns and contribution reports of political parties available in the public domain. Even at that time all political parties had opposed to part with this information. CIC had, however, directed the Income Tax authorities to make this information public as there was huge public interest in the information.


Analysis of the replies showed that the top five political parties with the highest total income between 2004-05 and 2010-11 (last seven years) are:  Congress with Rs 2,008 crore followed by BJP: Rs994 crore, BSP: Rs484 crore, CPM: Rs417 crore and SP: Rs279 crore.. The ADR also found from this information that majority of the money comes from donations, however; the names of donors formed a small percentage on the official record.


The Act defines public authorities thus:

h)          “public authority” means any authority or body or institution of self government established or constituted,—

(a)                by or under the Constitution ;

(b)               by any other law made by Parliament;

(c)                by any other law made by State Legislature;

(d)               by notification issued or order made by the appropriate government,

and includes any--

         (i)       body owned, controlled or substantially financed;

         (ii)      non-government organisation substantially financed,

          directly or indirectly by funds provided by the appropriate government;”


(Vinita Deshmukh is the consulting editor of Moneylife, an RTI activist and convener of the Pune Metro Jagruti Abhiyaan. She is the recipient of prestigious awards like the Statesman Award for Rural Reporting which she won twice in 1998 and 2005 and the Chameli Devi Jain award for outstanding media person for her investigation series on Dow Chemicals. She co-authored the book “To The Last Bullet - The Inspiring Story of A Braveheart - Ashok Kamte” with Vinita Kamte. She can be reached at [email protected].)




4 years ago

Indeed very SAD for the future of Indian Democracy.
It is high time that the Election Commission of India issue a notice to all recognized political parties TO COVER THEMSELVES as "Public Authorityand be accountable to the nation/people.

Mohan Siroya
Chairperson -- Consumer Complaints Cell

MK Gupta

4 years ago

No wonder, since not a single party can survive a day without the support and generation of black money shared by them. Political parties or persons are the same all over the country, nay, the world over. But, in India, political parties have all along been surviving and thriving on and with black money stashed in Swiss banks--in various names--and the so called Communists and ultra Leftists including some doyens of journalism are no exception. Let the CBDT be made an autonomous and independent body like the CAG or the CVC and then see their true colour and that of our "leaders" organising dharnas after leaving the ruling coalition fot gaining extra mileage after altready reaping the benefits of the black economuy and juicy miinistries! IT Officer-slapping or selling paintings after suddenly becoming self-taught painters to meet huge expenses on a win-win game of politics apart, the basics of all political animals is the same. Elections are fought and won with dishonestly and fraudulently organised state-managed or gun-toting-gangs led rigging and purchased votes--a tradition inherited from our dear Colonial past when district Board elections were won by the Khadi brigades supported by the ruling class. And, come summer-our leading lights in the Left field start cool foreign (lecture) sojourns, feigning intellectual superiority having no experience ever with facing general elections on mother eart! And they claim to be pro-people but never question the basis of the legal status and Constitutional validity of the all-powerful status and right to access all state secrets given to the UPA/NAC Chairman! Courage and integrity are words no more to be found in the lost dictionaries of the animals in the political arena who can go to any extent to remain in power and limelight, including the self-styled anti-corruption crusaders being likened to Gandhi! Sic!

sohan modak

4 years ago

RTI is a hard won privilage of Indian people and must be defended at any cost.

sohan modak


4 years ago

Prime Minister Manmohan Singh, who gave a sermon to the nation about money not growing on trees, spent Rs 7,721 on each plate of dinner that was served at the recent third anniversary celebrations of the UPA-II government held at his residence here.

Ironically, the Singh-led UPA-II government expects the aam aadmi to live on Rs 26 or Rs 32 a day.

Effectively, what Singh has spent on each plate, could feed 296 aam aadmis for a day.

This information was revealed in response to an RTI application filed by activist Ramesh Verma. According to the reply, at a time when fiscal deficit remains a cause of worry and the growth rate is floundering, Rs 11,34,296 was spent on food at the dinner party. A sum of Rs 14,42,678 was spent on tent arrangements and Rs 26,444 was shelled out for flowers. The total bill of an ‘austere’ government’s dinner party was Rs 28,95,503.

The PM had invited 603 people for the party but only 375 invitees attended it.

"the above is report appering in TNIE today".

So there is no hope Gadkari, Sushma, Pawar, Karuna, Maya, Mulayam, Communists all are stripping the assets as per power vested on them by the electorate. Sonia is the smartest of them as she is holding incriminating evidences against others and she is using it for black mail as admitted by a desperate Mamata other day in an interview in CNN IBN and Manmohan is the biggest crook who has no hesitation in trading his chair for acting as a benami for Sonia. O mighty Queen pass on the wine, Oh Pope the bastard pass on the custard. Jai bolo Be-imaan ki Jai bolo.

ashok sen

4 years ago

Ms Desmukh writes with such clarity.She should write to the main national dailies on this issue, so that more people become aware of what she so rightly states.
Her statement
These replies bring to the fore the biggest farce that our democracy is plagued with—the opaque functioning of political parties with no space for engagement with the citizens and no willingness to open themselves to public scrutiny.’’

is so true.We citizens need to agitate to bring our corrupt,venial politicians to book.The system needs cleansing.In the U.S. currently, a part of the reason Mit Romney will lose is that he refuses to give his tax returns for the past ten years,leading to many Republicans to distrust him, and vote for the democrats.



In Reply to ashok sen 4 years ago

I agree with your observations. But cannt resist the temptation to joke that 'if in US it takes ten years to detect a lapse in filing tax return, we in India have enough time to catch up: )'

ashok sen

In Reply to M G WARRIER 4 years ago

Mr. Warrier,
I think you misunderstood my comment, or maybe I was not sufficiently clear.
Romney filed his tax returns, but is unwilling to let it be public knowledge.
By law he is right, but when you are in the public eye, one has to go beyond what is required by law,and prove you are morally above mere mortals.


In Reply to ashok sen 4 years ago

That is why I qualified it as a joke. A country with three times India's geographical area, cent per cent literacy, 200 years history of independence, less than one third our population and the entire world's resources under control can have perfect systems in place. Thanks.

nagesh kini

4 years ago

Vinita is right.
Letting off political parties will set a very bad precedent for the rest of the aam janata.

Failure to attend should be slapped with contempt proceedings and maximum penalty imposed.

The EC and Income Tax should be called upon to furnish all information filed with them and proceedings launched.

None of the Parties that speak of democracy practice it themselves - there is no inner party democracy. Only the High Command and Party Chief diktats a la INC and TNC/Shiv Sena and MNS speak for themselves!

SEBI moves SC against Sahara Group

SEBI filed an application alleging that the Sahara Group has not furnished all documents in their custody to the regulator by 10th September

New Delhi: Market Regulator Securities and Exchange Board of India (SEBI) on Wednesday approached the Supreme Court accusing the Sahara Group of not complying with its order to furnish documents about its two companies which were directed to refund around Rs24,000 crore to their investors, reports PTI.


SEBI filed an application alleging that the Sahara Group has not furnished all documents in their custody to the regulator by 10th September.


The court on 31st August had said that if the companies --Sahara India Real Estate Corp (SIREC) and Sahara Housing Investment Corporation (SHIC)--fail to refund the amount then SEBI can attach properties and freeze bank accounts of the companies.


Further, it had asked the companies to refund the money to their investors within three months with 15% interest per annum. It had also directed Sahara to furnish all documents in their custody to the regulator.


"Saharas are directed to furnish all documents in their custody, particularly, the application forms submitted by subscribers, the approval and allotment of bonds and all other documents to SEBI so as to enable it to ascertain the genuineness of the subscribers as well as the amounts deposited, within a period of ten days from the date of pronouncement of this order," the Court had said.


The Court had also appointed one of its retired judges Justice BN Aggarwal to oversee the action taken by SEBI against the two Sahara firms.


The bench said that civil and criminal liability should be imposed on the company for indulging in such economic offence.


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