The adjustments made in the federal budget regarding the foreign investors will be taking place by 1st of August. It has been revealed that under the adjustment, the Finance Minister, Pranab Mukherjee has allowed mutual funds registered with the Securities and Exchange Board of India (SBI) to accept subscriptions from foreign investors who meet regulatory requirements.

For this purpose, SEBI will be working as the market regulator. It has further been revealed that the SEBI will notify the rules regarding such investments by August 1, 2011. At present, only foreign funds and sub-accounts registered with the regulator and non-resident Indians are allowed to invest in local mutual fund schemes.

The distributors are expecting SEBI to loosen up rules on selling funds and let asset management companies pay more commission to distributors to sell products. It has been unveiled that the total ceiling on qualified foreign investors in India will be $10 billion.

Meanwhile, the mutual fund industry, last week, interacted with its regulator SEBI, at a summit in Mumbai. The objective of the summit which was organized by the Confederation of Indian Industry was to sort out way to boost the waning fortunes of the mutual funds industry, which has been impacted greatly by decline in the interest of retail investors.