Individual unit holders were observed holding more than 25% of the mutual fund scheme’s quarterly average net assets
As many as 33 mutual fund (MF) houses out of the total 45 were found to have violated the ‘20-25 rule’ which requires a minimum of 20 investors and a cap of 25% investment by an individual investor in a particular scheme, the Parliament was informed.
According to Nirmala Sitharaman, minister of state for finance, large-scale violations in several schemes of such fund houses were found by capital market regulator Securities and Exchange Board of India (SEBI).
“Letters were issued to 33 mutual funds, wherein individual unit holders were observed holding more than 25% of the scheme’s quarterly average net assets,” the minister said in a written reply to the Rajya Sabha.
She advised them to comply with the ‘20-25’ norms in “letter as well as in spirit.”
The fund houses were also advised to strengthen its systems and improve its compliance standards to avoid recurrence of such instances, failing which penal actions would be taken in accordance with the provisions of SEBI regulations.
Currently, there are about 45 fund houses in the country, which together manage assets worth about Rs10 lakh crore.
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