Page 17 - Banking Finance March 2022

MUTUAL FUND

tune of 35,975 crore in January for the prepare the financial statements and curred for the purpose of execution will
fourth straight month. accounts of the mutual fund schemes be charged to the schemes up to 12 bps
in accordance with Ind AS, with effect and 5 bps for cash market transactions
Equity mutual funds log Rs from April 1, 2023. and derivatives transactions, respec-
14,888 crore net inflow in Under the guidelines, mutual fund tively.
schemes will have to prepare the open- Any payment towards brokerage and
January ing balance sheet as on date of transi- transaction costs, over and above the
Equity mutual funds attracted a net tion and the comparatives as per the said 12 bps and 5 bps for cash market
sum of Rs 14,888 crore in January, requirements of Ind AS, Sebi said in a transactions and derivatives transac-
making it the 11th consecutive circular. tions, respectively may be charged to
monthly net inflow. However, this was As per mutual fund rules, perspective the scheme within the maximum limit
much lower than the net inflow of Rs historical per unit statistics requires of total expense ratio (TER).
25,077 crore witnessed in December, disclosure of scheme wise per unit sta- The new framework will be effective
data from the Association of Mutual tistics for the past three years. from April 1, 2023, the Securities and
Funds in India (Amfi) showed. Exchange Board of India (Sebi) said.
In this regard, Sebi said mutual fund
Equity schemes have been witnessing schemes may not be mandatorily re-
net inflow since March 2021 and the quired to restate the previous years DSP Mutual Fund stops
segment has received a net inflow of published perspective historical per fresh inflow in six schemes
over Rs 1 lakh crore during this period unit statistics as per requirement of Ind DSP Mutual Fund said it has stopped
highlighting the positive sentiments AS for the first two years from first accepting inflows into its six schemes
among investors. time adoption of Ind AS. with international mandates.
Prior to this, such schemes had consis- However, mutual fund schemes will The six schemes are - DSP US Flexible
tently witnessed outflows for eight have to furnish certain additional infor- Equity Fund, DSP Global Allocation
months from July 2020 to February mation in perspective historical per Fund, DSP World Gold Fund, DSP World
2021 losing Rs 46,791 crore. unit statistics. Mining Fund, DSP World Agriculture
Overall, the mutual fund industry reg- These additional information are re- Fund and DSP World Energy Fund.
istered a net inflow of Rs 35,252 crore lated to label the previous Generally The move comes after markets regu-
during the period under review com- Accepted Accounting Principles (GAAP) lator Sebi directed mutual fund houses
pared to a net outflow of Rs 4,350 information prominently as not being to stop taking fresh subscriptions in
crore in December. prepared in accordance with Ind AS; schemes investing in overseas stocks.
The average under management and disclose the nature of the adjust- The directive to stop subscription is
(AUM) of the industry rose to Rs 38.88 ments that would be required to make mainly on account of the mutual fund
lakh crore at January-end from Rs 37.72 it comply with Ind AS. Mutual Funds industry crossing the mandated limit of
lakh crore at December-end. schemes need not quantify those ad- USD 7 billion for overseas investments.
justments.
"In view of the impending breach of the
Sebi lays guidelines for The financial statements of the mutual industry-wide overseas investment limit
fund schemes will have to be prepared
mutual funds with respect of USD 7 billion as currently permitted
in a formats specified by the regulator. by RBI, Sebi has directed all asset man-
to Indian Accounting Stan- Also, Sebi has certain tweaked guide- agement companies to stop accepting
dards lines in order to align with Ind AS re- fresh inflows in schemes, which have
quirement regarding transactions cost the mandate to invest in overseas se-
Sebi came out with guidelines for as-
of investment to be expensed out (viz. curities without the optionality to invest
set management companies (AMCs)
to be charged to Revenue Account in- in Indian securities," the fund house said
with respect to following Indian Ac-
counting Standards (Ind AS). This stead of Capitalisation). in a statement.
comes after Sebi amended mutual As part of the modification, Sebi said "Mutual funds can make overseas in-
fund rules which mandated AMCs to brokerage and transaction cost in- vestments subject to a maximum of

BANKING FINANCE | MARCH | 2022 | 17