Page 10 - Banking Finance August 2022

RBI CORNER

"(The) exchange rate between the had sought public comments on
RBI's actions will usher in
currencies of the two trading partner whether the PIT Regulations need to
an era of prosperity: Das
countries may be market-deter- be amended to also cover the MF in-
mined," the RBI said. RBI Governor Shaktikanta Das ex- dustry.
pressed optimism that inflation would
The proposal comes close on the heels
SEBI ban on investment in come down during October-April of the of allegations of front-running at a
current fiscal (FY 2022-23).
MFs via pool a/c comes large fund house. In the discussion pa-
He also assured a flexible approach to per floated, Sebi has said it has ob-
into effect monetary policy making. served that a MF Registrar and Trans-
The much-awaited SEBI regulation fer Agent (RTA) had redeemed all its
"At this point of time, with the supply
banning use of brokers' pool account units from a scheme while being privy
outlook appearing favourable and sev-
for mutual fund (MF) transactions will to certain sensitive information. Simi-
eral high frequency indicators pointing
come into force after the deadline was
to resilient recovery in the first quar- larly, it observed a few key personnel
postponed. of the MF industry redeemed their
ter (April-June) of 2022-23, our assess-
All Systematic Investment Plans (SIPs) ment is that inflation may ease gradu- holdings in the schemes while in pos-
where the money is transferred from ally in the second half of 2022-23, pre- session of certain sensitive information
broking account balance to the fund cluding the chances of a hard landing not communicated to the unit holders
house will stop and investors have to in India," Das said, while addressing the of the schemes.
sign up for fresh National Automated Kautilya Economic Conclave organised
Clearing House mandates in favour of by the Finance Ministry and the Insti- SEBI mulls 'risk factor dis-
the clearing corporation. tute of Economic Growth here.
closure' on market trends
Pool account is kind of electronic wal- Retail inflation based on the Consumer
In a global first, the Securities and Ex-
let facility provided by the brokers. In- Price Index (CPI) has been over 6 per
change Board of India (Sebi) is planning
dividual investors can store money in cent in recent months, with April re-
to issue regular 'risk factor disclosures'
the wallet and transfer money to buy cording an eight-year high of 7.9 per
on market trends, including surges and
MF units in particular scheme. How- cent. At the same time, producers in-
collapses, to help investors make right
ever, investors have to mandatorily flation based on the wholesale price
decisions by learning from the
transfer money from their own bank index (WPI) was at a nearly four-de-
regulator's insights, sources said.
account for investing in MFs. cade high of 15.8 per cent in May.
The move, which is still in a preliminary
Last October, SEBI had directed the
SEBI considers bringing stage of discussion, can help investors
fund houses to not allow stock brokers,
avoid a herd mentality that has been
MF distributors, investment advisors MFs under insider trading
particularly witnessed during the last
and other service providers to invest in
ambit couple of years -- starting with large-
schemes on behalf of investors using
scale selloffs when the pandemic hit
their pool account from April 1, 2022. The Securities and Exchange Board of
the world in early 2020, followed soon
India proposed bringing mutual fund
However, the Association of Mutual
(MF) transactions under the purview of by a sharp surge in buying of stocks
Funds in India (AMFI) moved the mar-
stringent insider-trading regulations to without understanding the fundamen-
ket regulator seeking an extension of
prevent abuse of sensitive information tals and largely on account of get-rich-
deadline to July 1 as the process in-
by key personnel in the MF industry. quick stories and then subsequent
volved technical changes both at the
losses.
fund house and brokers end. While Currently, MF units are excluded from
agreeing on the industry request, SEBI the definition of 'securities' under the Particularly of significance has been the
had told fund houses that they will not Prohibition of Insider Trading (PIT) losses suffered by investors in a large
be allowed to launch new fund offers Regulations, and buying and selling of number of IPOs in the recent past and in
till its direction on pool account is MF units is excluded from the defini- the highly complicated futures and op-
implemented. tion of 'trading'. The market regulator tions segment of the capital market.
10 | 2022 | AUGUST | BANKING FINANCE