Capital market controller Securities and Exchange Board of India (SEBI) has directed all fund houses to raise the time limit they spend on risk warnings to investors in their radio as well as television ads.

SEBI has asked them that the time for display and voice over to the standard warning be increased to five seconds in place of the current rapid fire manner.

In a circular, regulator said funds that presently take just two seconds to direct customers that “Mutual fund investments are subject to market risks, read the offer document carefully before investing” must now be exhibited and read out for at least five seconds.

“The rapid-fire manner in which the standard warning is recited in the audio visual and audio media renders it unintelligible to the viewer/listener,” said the SEBI circular.

SEBI has decided the new guidelines after consultion Associations of Mutual Funds in India (Amfi). The novel decision will be effective from April 1, 2008.

Mr. Arindam Ghosh, Chief Executive Officer, Mirae Asset Management said, “Our costs would go up but this is something we will have to comply with.”

Sebi’s decision has come in the wake of economic advisory council to Prime Minister C Rangarajan's statement.

Rangarajan had, at a recent awards ceremony in Mumbai, said, “Information is a major concern. Take the case of advertisements for mutual funds that are expected to carry statutory warnings regarding risks”.

The Chief Investment Officer of a mutual fund house stated, “The duration of a warning does not ensure that investors have understood the real risks behind investing; all mutual funds can do is to adhere to SEBI’s directive.”