Page 16 - Banking Finance March 2022

MUTUAL FUND

Mutual Fund News

Sebi directs AMCs to form "The Audit Committee of the AMC shall money into equity mutual funds in Janu-
be responsible for oversight of financial ary for the eleventh straight month,
audit committee from Au- reporting process, audit process, but flows were lower compared to

gust company's system of internal controls, December as sharp swings in the stock
Markets regulator Sebi has asked as- compliance to laws and regulations and market led to heightened caution. Eq-
set management companies (AMCs) to other related process, with specific uity schemes garnered 14,888 crore in
form audit committees which will be reference to operation of its Mutual January as against 25,077 crore in
responsible for oversight of financial Fund business," Sebi said in its circular. December. Collections through sys-
reporting process, audit process and The regulator has laid down detailed tematic investment plans (SIPs) in-
compliance with laws and regulations, powers and responsibilities of the com- creased to another record high of
among others. mittee with respect to financial report- 11,517 crore as against 11,306 crore
in the previous month.
The circular will come into force with ing, audit (internal and statutory) and Debt mutual funds too saw inflows of
effect from August 1, 2022. Currently, internal controls, regulatory compli- 5,088 crore, taking the industry's total
audit committee exists at the level of ance and other functions. assets under management (AUM) to
trustees of mutual funds. The internal auditor has to submit its an all-time high of 38.89 lakh crore,
Sebi said the decision has been taken report to the audit committees of AMC compared to the previous month's
after taking into account the recom- and the board of AMC, Sebi said. 37.92 lakh crore.
mendation of Mutual Fund Advisory The committee shall forward their ob- Fund officials and analysts said inves-
Committee and the feedback received servations on internal audit report, if tors were more cautious in January. In
from the industry and has come out any, to the trustees, it added. December, the record flows of 25,077
with detailed outline for role, respon- crore were also on account of large
sibility, membership and other features Equity fund inflows slow collections by three new fund offers.
of the Audit Committee of AMC.
from December high, SIPs "Concerns over 'new' variants across
Mandate of the committee is to review Agencies the globe, relatively high valu-
the financial reporting processes, the hit new record ations and rising inflation have likely led
system of internal controls and the Most equity scheme categories got to a reduction in the magnitude of
audit processes for the mutual fund inflows, with flexicap funds getting the flows over the past month," says
operations of the AMC. highest flows of Rs. 2,527 crore fol- Kavitha Krishnan, senior analyst - man-
Besides, it would be required to ensure lowed by sectoral funds at Rs. 2,073 ager research, Morningstar India.
that the rectifications, if any, suggested crore and large-cap funds at Rs. 1,890 The resilience in flows into equity mu-
by internal and external auditors, crore. tual funds was despite selling by foreign
among others, are acted upon. Individual investors continued to pour institutions, who dumped stocks to the

16 | 2022 | MARCH | BANKING FINANCE