A special committee of the State Bank will consider implementing mutual funds reforms at a meeting on Tuesday.
The mutual fund advisory committee (MFAC) will discuss a proposal to make it mandatory for the asset management company to invest at-least Rs 50 lakh in every scheme offered by it to the customers. The move will indicate the company's commitment to the schemes as it will put its own money at stake and this will significantly boost investor confidence.
Prime Minister Manmohan Singh had recently said after taking over the Finance Ministry that some issued needs to be addressed in the mutual funds industry in the country. Officials from the union finance ministry, which is currently headed by the Prime Minister, have held a meeting with representatives from the mutual fund industry and the Securities Exchange Board of India (SEBI) to discuss ways to boost growth in the sector.
The mutual fund companies want to pass on the burden of 12 per cent service tax on the purchase of schemes to the consumers. Upendra Kumar Sinha, Chairman of SEBI, had earlier expressed concerns over the health of the mutual funds' industry in the country.
The mutual funds' industry has been affected by leaving investors and difficult domestic as well as global economic environment. The Indian mutual fund industry sank by as much as 16.5 per cent as its assets under management (AUM) fell from Rs 703,669 crore in March 2011 to Rs 587,659 crore in March 2012.