Some non-serious players present in mutual fund space: SEBI

SEBI is working on a Mutual Fund policy and once this policy is in place, the MF industry will have clarity about the future of the industry says UK Sinha

Mumbai: Market regulator Securities and Exchange Board of India (SEBI) has said there is a case for consolidation in asset management industry due to presence of some non-serious players, but clarity on this course will emerge only after the national mutual fund policy is put in place, reports PTI.


"My view on that is that asset management industry has also got some non-serious players, and one of the reasons for that is that there is a very easy entry situation here," SEBI Chairman UK Sinha told PTI in an interview.


Asked whether it is time for consolidation in the mutual fund industry as some of the funds were very small, Sinha said: "Right now, if you look at the scenario as a static situation, then perhaps there is a case for consolidation."


Currently, there are around 40 mutual fund companies and the numbers have risen sharply in the past couple of years.


SEBI regulates a host of the segments including mutual funds. SEBI recently announced a slew of reform measures for the mutual fund industry to expand their reach across the country and also to safeguard the interest of investors.


Detailing the reasons behind presence of non-serious players, Sinha said: "The entry barriers are not there and the capital requirement is very small. So, one of the things SEBI has decided is to develop a Mutual Fund Policy.


"Like the Insurance policy and the Pension policy, SEBI is working on a Mutual Fund policy and once this policy is in place, the mutual fund industry will have clarity about the future of the industry.


"At that stage, there may be some consolidation activities," Sinha said.


SEBI Chairman said that the asset management business would also be guided by what will happen in the pension area.


"If the pension area opens up, then we may require even more mutual funds. If the pension area does not open up and the issues related to capital requirements and tax requirements are clarified, even then there will be some changes," he said.


Sinha was, however, optimistic about some positive developments for the industry and said: "I believe the government is also looking at, after we gave them our report on this issue, on the tax treatment.


"I hope there will be some more clarity on the pension front as well. Once these two things happen, then it will be clearer whether we need more mutual funds or less," he said.


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Reliance Capital fully-prepared for banking foray: CEO

Sam Ghosh, the CEO of RCap said that final regulatory framework is yet to come on this front, but Reliance Capital is certainly fully prepared on its part for the banking foray

Mumbai: Amid indications of the government and the Reserve Bank of India (RBI) gearing up to grant new bank licences, Reliance Capital has said it is full-prepared from its side to foray into the banking business, reports PTI.
"We are ready. We have been working on this for quite some time... for about one and half years," Sam Ghosh, chief executive of Reliance Capital told PTI in an interview.
Reliance Capital, the financial services arm of Anil Ambani-led Reliance Group, has been one of the major aspirants of the new banking licences to be granted by the RBI.
While the process of granting new banking licences have been underway for quite some time, the government has recently indicated that a framework could be put in place soon for allowing new players in this business.
The RBI had issued draft guidelines in August 2011 for issuance of new banking licences, while in July 2012 it released the comments and suggestions received by it.
Asked about the group's banking aspirations, Ghosh said that final regulatory framework is yet to come on this front, but Reliance Capital was certainly fully prepared on its part.
"We are ready to the extent of the current scenario and once the final guidelines come up, we will be in a better position to understand the situation," he said.
Asked whether it would be good to have new banks, Ghosh said that the country has an estimated 200 million bank accounts, while there are about 600 million mobile customers.
"So, there is clearly a big gap and there is a need to take banking to a larger number of people," he said.
"When it comes to the question that whether there is a case for merging smaller banks with the larger ones, the consolidation should also be good for the industry," he said.
For the new banks, the draft guidelines are, however, clear that the new licensees would have to have a proportionate presence in the rural areas and they cannot limit themselves to urban centres, Ghosh said.
He said that all banks would need large amount of capital and it would help if consolidation takes place.
Asked whether Reliance would consider an acquisition, Ghosh said that draft guidelines do not allow such a move.
Along with Reliance Capital, a number of other private players including Religare, L&T and Shriram are eyeing a banking licence for a long time.
Addressing Reliance Capital shareholders last year, Chairman Anil Ambani had said that the group's banking entity could be called 'Reliance Bank'.
The group is present in a host of financial services segments including insurance, asset management, NBFC and financial products distribution, among others, and the banking remains one of the few businesses missing from its portfolio.


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