Page 18 - Banking Finance AUGUST 2015

MUTUAL FUND

Mutual funds raises allo- MF houses arrests mis-selling by raising the bar on
cation of bank stocks to investment
Rs 79,000 cr
MF Houses have raised the bar on tion of Rs 1lakh in our high-risks
Mutual Fund managers have enhanced investments for high - risk schemes to schemes like infrastructure, entertain-
the allocation for banking stock to over Rs 1 lakh from Rs 5,000 in order to ment, public sector enterprises and
Rs 79,000 crore in May this year in arrest mis-selling. They have started banks," newly-appointed. Sundaram
anticipation of a rate cut by the Re- calling up investors to know if they Mutual CE Sunil Subramaniam told.
serve Bank. have understood the product well, with
Systemic Investment Plans (SIPs) tak- "Also, we have set up a customer call-
Earlier, equity fund managers' deploy- ing the centre - stage. back centre at our office so as to re-
ment in banking stocks stood at Rs
48,419 crore in May 2014. Usually, a minimum sub- solve grievances of our
scription of Rs 5,000 is customers relating to mis-
According to industry experts, fund required for investors to selling," he added.
managers put in their money in MF
raised their schemes being run by Axis Mutual Fund said, it
allocation companies. However, Sundaram Mu- calls up its investors in
last month tual, a Chennai-based fund house, has case they have invested
to bank increased the limit to Rs 1 lakh for its in long term equity funds to tell them
stocks ex- high-risk schemes. if they understood the product well at
pecting a the time of putting in their money.
rate cut by "We have made a minimum subscrip-
Also, it has asked its distributors to go
the Reserve Bank of India (RBI). for risk profiling of such investors.

The allocation is expected to increase MF firms urge employees to invest in in - house schemes
further this month as RBI, in its policy
review on June 2, had cut interest rate In order to enhance the confidence amongst the investors, the domestic asset
by 25 basis points to 7.25 per cent, management companies are asking employees to make their personal
they said. investments in schemes of the fund houses they work with.

Experts also said that, fund managers Recently, Kotak Mutual Fund (MF) made compulsory for employees planning to
cannot take a bearish call on banking invest in mutual funds to invest only in its schemes. This means an employee cannot
stocks, given the high weightage at- invest in any other scheme if he intends to put money in mutual fund products.
tached to the index.
Many other fund houses are expected to formally follow the suit. So far, MFs
had made it only voluntary for staff to invest in schemes of fund houses where
they were employed. ICICI Prudential Mutual Fund's senior executives invest a
portion of their variable pay in their employer's products.

Cashless transactions will attract IT rebates for consumers

In order to boost digital payments, the government has recently proposed tax benefits to merchants for accepting
electronic payments and income tax rebates to consumers for paying a certain
proportion of their expenditure through electronic means. "An appropriate tax
rebate can be extended to a merchant if at least say 50 per cent value of the
transactions is through electronic means. Alternatively, 1-2 per cent reduction
in value added tax could be considered on all electronic transactions by the mer-

chants," the finance ministry said in the "Draft Proposals For Facilitating Electronic Transactions".

The ministry also proposed that high value transactions of more than Rs.1 lakh, will only be accepted by electronic
means. Further to promote e- transactions, the ministry proposed reduction in the Merchant Discount Rate (MDR)
and the rationalization of the distribution of the MDR across different stakeholders. Presently there is a MDR of 0.75
per cent on debit card transactions up to Rs.2,000 and 1 per cent on all transactions above Rs.2,000.

18 | 2015 | AUGUST | BANKING FINANCE