Mutual fund industry regulations and trends

The Below is the table of Mutual Fund Regulation and trend from 1963-2019

Year Regulation
   
   
1963 Formation of the Unit Trust of India
1964 Launch of the maiden scheme of UTI-Unit Scheme
1987 Entry of public sector funds SBI Mutual Fund was first one followed by Canbank Mutual Fund
1993 Emergence of private sector funds Franklin Templeton (erstwhile Kothari Pioneer) was the first of its kind
1993-2003 Robust growth and revised MF regulation from SEBI in 1996, entry of foreign funds, several mergers and acquisitions
2009 Removal of the entry load
2012 Single plan structure for mutual fund schemes

 

Cash investment allowed in mutual funds  

Fungibility of total expense ratio (TER) allowed  

Portion of TER to be used for investor education l Entire exit load to be credited to the scheme  

Launch of Rajiv Gandhi Equity Savings Scheme (RGESS)

2013 Reduction in Securities Transaction Tax (STT) for equity funds  

 

Uniform Dividend Distribution Tax (DDT) of 25% on all debt mutual funds  

Product labelling  

Introduction of direct plans

2014 Changed the definition of ‘long term’ for debt mutual funds to 36 months from 12 months for LTCG  

 

Tax exemption limit for investment in financial instruments under Section 80C raised to Rs 1.5 lakh from Rs 1 lakh

2015 Launch of MF Utility (MFU) – Digital aggregator platform by the industry, for the industry  

 

SEBI asked fund houses to shift from colour coding to Riskometer which classified schemes based on the risk profile  

EPFO started investing in the equity market via Exchange Traded fund (ETF)  

SEBI allowed gold ETFs to invest up to 20% of their assets in the government’s Gold Monetisation Scheme

2016 SEBI tightened norms for mutual fund investment in corporate bonds  

 

Allowed investment advisors to use the infrastructure of the stock exchanges for sale and purchase of mutual fund units  

Provided easy entry to the foreign fund managers keen to enter India

2017 SEBI allowed mutual funds to invest in REITs and InvITs  

 

Allowed investment up to Rs 50,000 per mutual fund per financial year through digital wallets  

Instant access facility to the liquid funds investors (via online mode) of up to Rs 50,000 or 90% of the folio value, whichever is lower  

Government discontinued the tax benefits of RGESS

2018 SEBI asked fund houses to benchmark returns of equity schemes against a total return index (TRI)  

 

SEBI introduced categorisation and rationalisation of mutual fund schemes making it simpler for investor to understand  

LTCG of 10% without indexation introduced for equity-oriented funds for investment horizon of > 1 year, subject to capital gains of over Rs 1 lakh per assessee per year. Dividend plans of equity-oriented funds subject to a DDT of 10%, deducted at source  

Mutual fund houses asked to disclose TER for all schemes under a separate head on their websites on a daily basis  

SEBI further redefined the scope for T15/B15 cities to T30/B30 and push for higher penetration

2019 Industry adopt the full trail model of commission in all schemes without payment of any upfront commission. Upfronting of trail commission will be allowed only in case of inflows through SIPs for new investors to the industry (identified by PAN), up to 1% for maximum of three years  

 

AMFI website starts disclosing fund industry scheme industry performance data on a daily basis  

Additional TER of 30 bps from B-30 cities restricted to individual investors   TER slabs cut by 0.25% for both equity and debt schemes; the uppermost slab is pegged at 2.25% for equity funds having an AUM of up to Rs 500 crore, and 2% for other schemes. In the highest AUM slab of above Rs 50,000 crore, the TER for equity funds would be 1.05% of the scheme’s AUM and 0.80% for other schemes  

SEBI allows side-pocketing if debt assets are downgraded to below investment grade  

SEBI puts in place a robust and stricter cybersecurity framework for mutual funds and AMCs to guard against breaches of data leak, directs AMCs to constitute a technology committee to review the cyber security and resilience framework of the mutual fund industry  

Caps weightage of a single stock in sectoral and thematic indices, and set norms for minimum stocks an index needs to have in a bid to protect investors from risks related to portfolio concentration in ETFs and index funds  

Industry threshold for amortisation of debt securities changed to 30 days from 60 days, proposed to move to full MTM by early next year  

Proposed cap on sectoral limit of 25% has been brought down to 20%. The additional exposure of 15% to HFCs will be restructured as 10% to HFCs and 5% to securitised debt  

Prescribes minimum holding of 20% in cash, receivables and government securities to improve liquidity of liquid funds  

Prescribes mandatory investment in listed securities

   

Published by Aakash and Meet

I am Aakash Raotole I am currently doing Bcom from Dr. Patel and Rb Patel commerce college I am currently studying at finnacle investment academy Recently done distance internship with windrose capital, Pune - for a period of 14 weeks I am Meet Bhatt Completed HSC in commerce Now studying finbridge program at finnacle investment academy and Bcom externals I had completed CFA institute's investment foundation course and distance internship with Windrose capital, Pune - for a period of 14 weeks

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