Page 18 - BANKING FINANCE MARCH 2024

MUTUAL FUND

Mutual Fund

SEBI increases scrutiny on If funds are used to reduce debt, pro- standing, monthly inflows through SIPs
moters will have their shares locked in in MF schemes went past the Rs 18K
IPO documents for 18 months. However, if funds are crore mark to settle at Rs 18,838

India's market regulator is increasing being raised for capital expenditure, crore, while assets under management
scrutiny of issue documents filed by promoters have a three-year lock-in for the industry scaled a peak at Rs
companies going public, four sources period. 52.7 lakh crore.
said, amid a rise in initial public offer- 'Promoters' is a regulatory classifica- Last month, a record 51.8 lakh new
ings in the Indian market. tion in India that includes large share- SIPs were opened, data released by MF
The country's surging stock market has holders who can influence company industry body Amfi showed, while the
prompted nearly 50 companies to policy. total number of folios were almost at
launch public issues in 2023; eight is- "By saying the company is using funds 17 crore - also an all-time high num-
sues have been completed so far this to retire debt, they (promoters) are ber.
year and another 40 are waiting for circumventing the law and reducing The surge in SIP accounts, coupled
clearance from the Securities and Ex- the share lock-in period from three with the milestone of 51.8 lakh new SIP
change Board of India (Sebi). years to 18 months," the first person registrations, underscores the commit-
said.
"The regulator has returned at least six ment of investors towards disciplined
public offer documents, as Sebi ob- An investment banker, who declined to wealth creation, said Amfi chief execu-
served companies are misleading in be identified as discussions with the tive, Venkat Chalasani. "Moreover, the
their reasons for fundraise," said the regulator are private, said Sebi has industry's net AUM soaring to Rs 52.7
first of the four people cited above. sought a detailed break-up of whether lakh crore further accentuates the re-
IPO proceeds are being used to retire silience and potential of mutual funds
The regulator is particularly scrutinis-
debt taken for capital expenditure. as a preferred investment avenue,"
ing what companies say they intend to Chalasani said.
use funds raised from the IPO for, "This is making disclosures fairly cum-
these sources, directly familiar with bersome," they added. Tata Mutual Fund files
the matter, said. Earlier this month, India's market regu-
The sources declined to be identified as lator said it was investigating three draft document for two
IPOs for allegedly inflating the number
they are not authorised to speak to the index funds
of subscriptions received.
media. Sebi did not respond to an email. Tata Mutual Fund has filed two draft
As per Sebi rules, funds raised via IPOs Monthly SIP flows at documents with Sebi for two index
can be used for capital expenditure, funds: Tata Nifty Realty Index Fund and
debt reduction, general corporate pur- record Rs. 18.8k crore Tata Nifty Auto Index Fund.
poses and acquisitions. A volatile stock market in Jan notwith- Tata Nifty Realty Index Fund Tata Nifty

16 | 2024 | MARCH | BANKING FINANCE