Follow ethical practices, be transparent, Sebi chief to MFs

Mutual funds must focus on technological advancements, follow ethical practices and be transparent, said Securities and Exchange Board of India’s chairperson Madhabi Puri Buch. Speaking at an Association of Mutual Funds of India (AMFI) event on Tuesday, she asked the industry to move from ‘letter of law to spirit’ and urged mutual funds to ensure that no individual becomes a trigger for the regulator to step in.

The Sebi chief said mutual funds are an important vehicle to encourage investors to participate in the markets. Buch expressed confidence in the industry’s potential and said its asset size could grow from the current ₹40 lakh crore to ₹100 lakh crore.

She asked the industry to adopt robust self-regulation measures and warned them that the regulator will step in if they fail to do it themselves. The biggest risk to growth of the mutual fund industry is individual misdemeanors, said Buch. “The only thing that is a risk to the industry is where individual misconduct of persons in this industry.”

The Sebi chairperson said industry body AMFI should establish an ethics committee to take action against individuals engaging in misconduct, even though it is not officially a self-regulatory organisation (SRO).