SEBI Chief Draws AMFI's Attention to Form an Ethical Committee

May 31, 2023 / Reading Time: Approx. 7 mins

Listen to SEBI Chief Draws AMFI's Attention to Form an Ethical Committee

00:00 00:00

 

The market has several institutions set up to ensure you are well-informed while defending your rights as an investor. The Association of Mutual Funds of India (AMFI) is a prime example of such a renowned organisation.

AMFI is the association of mutual funds in India. This organization currently has 43 SEBI registered Asset Management Companies (AMCs) as its members. The AMFI serves as the industry's regulator, has established clear standards and ethics for trading and investing in mutual funds, and strives to follow those standards. It takes directions from SEBI and ensures that the laws and regulations are applied correctly, striking a balance between industry advancement and the protection of investors' interests.

On Tuesday, May 30, 2023, AMFI's new premises at BKC, Mumbai, India, was inaugurated by the Securities and Exchange Board of India's (SEBI) Chairperson, Madhabi Puri Buch.

Mr A Balasubramanian, Chairman of AMFI, said, "We are delighted about the inauguration of AMFI's new premises by the SEBI Chairperson. This new premise is a reminder of our constant endeavour to promote and strengthen the mutual fund industry in India. And with this centrally located office, AMFI is well-positioned to drive positive change and provide valuable services to its members and stakeholders."

Mr NS Venkatesh, CEO of AMFI, said, "The new AMFI office reflects our unwavering commitment to the mutual fund fraternity and all stakeholders. It is a testament to our vision of strengthening the Indian mutual fund ecosystem and driving investor education and awareness. We look forward to working closely with our industry partners to shape a brighter future for the mutual fund industry in India."

SEBI Chief Draws AMFI's Attention to Form an Ethical Committee
Image source: www.freepik.com
 

Join Now: PersonalFN is now on Telegram. Join FREE Today to get 'Daily Wealth Letter' and Exclusive Updates on Mutual Funds

 

What Did SEBI Chief Suggest to AMFI?

At the inaugural, SEBI Chief congratulated AMFI saying, "These new premises at BKC are a testament to the growth and vitality of the mutual fund industry."

Further, the SEBI chairperson Ms Buch addressing the Rs 40 trillion Indian mutual funds industry, made some important comments. She emphasised the importance of transparency as a core value in the mutual funds industry and stressed that the industry should focus on upholding the spirit of the law and not just mere compliance.

She said, "If the AMFI fails to adopt self-regulation measures, SEBI will have to step in to ensure investor protection. We know that AMFI does not have an SRO (self-regulatory organisation) status but must self-regulate and act against misdemeanour by individuals, or else SEBI will have to step in. Do what is right, not what is easy."

The SEBI Chief's strong words for the mutual fund industry came against the backdrop of the recent regulatory ban on Axis Mutual Fund's former dealer Viresh Joshi. As he was front-running the fund's trades to make illegal profits for himself and his family members. Chandresh Nigam, the former MD and CEO of Axis Mutual Fund, was forced to resign and depart in March 2023 when SEBI's order regarding front-running at the fund business came to light.

[Read: Axis Mutual Fund Suspends Two Fund Managers for Alleged Irregularities. Know the Details Here]

The SEBI Chief has instructed AMFI to form an 'Ethical Committee' to ensure that all industry participants obey the rules in letter and spirit to prevent similar or any other unlawful practices in the future. The committee needs to make sure that its AMC members don't cut corners in order to draw in investor's attention and boost assets under management (AUM). It must also prevent individuals from triggering regulatory intervention by ensuring ethical practices and promptly addressing the wrongdoings.

Should AMFI form an Ethics Committee?

Talking about the proposed 'Ethical Committee' of AMFI, Ms Madhabi Puri Buch said, "The panel is envisioned to be able to take action on a self-regulatory basis against individuals who are found involved in misconduct such as front-running and insider trading."

"It will not have judicial powers but a voluntary alignment of the industry to work for the collective good. And if that means that the ethics committee has to call somebody and say this is bad behaviour, and we will all have to pay for your bad behaviour, then that is by its voluntary nature. If that entity says 'we do not care', it is free to leave AMFI," She added further.

According to Ms Buch, the mutual fund industry has set a strong foundation; now, the risk that can tremble the industry structure is individual misconduct. As a result, now is the time to build a robust structure that helps prevent risk to the mutual fund industry. SEBI Chief also expressed her confidence in the industry's potential to expand from its current size to around Rs 100 lakh crore.

Furthermore, Ms Buch said, "The industry itself has not invested much in building core technology. I worry for you on that count. I would urge you to invest in the systems and technology."

Technology is a crucial component that enables the sector to operate effectively and affordably at the same time. The SEBI Chief advised AMFI to focus on improving the sector's infrastructure by investing in substantial technological advancements and suggested exploring better ways to utilise technology internally.

 

MITALI DHOKE is a Research Analyst at PersonalFN. She is an MBA (Finance) and a post-graduate in commerce (M. Com). She focuses primarily on covering articles around mutual funds including NFOs, financial planning and fixed-income products. Mitali holds an overall experience of 4 years in the financial services industry.

She also actively contributes towards content creation for PersonalFN’s social media platforms in the endeavour to educate investors and enhance their financial knowledge.


Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.

Disclaimer: This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision.

PersonalFN' requests your view! Post a comment on "SEBI Chief Draws AMFI's Attention to Form an Ethical Committee". Click here!

Most Related Articles

What Are Sectoral Mutual Funds? Should You Invest in Them in 2025? Sectoral and Thematic Funds aligned with these thriving industries have the potential to generate strong returns.

Apr 04, 2025

How Trump's 25% Tariff on Auto Imports Would Impact Mutual Funds Holding Auto Stocks Investors are sceptical that any indirect impact from this policy change could affect the performance of auto-related stocks.

Apr 03, 2025

Mutual Funds Sahi Hai, But Only If You Invest Wisely The Mutual Funds Sahi Hai (Mutual Funds are a right choice) campaign, has encouraged many investors to mobilise their savings into wealth-creating assets. 

Apr 02, 2025

Ensure Your Financial Prosperity This Gudi Padwa Just as we raise the Gudi for victory and courage, we need to strengthen our financial future through careful planning and wise investment.

Mar 29, 2025

Nippon India Small Cap vs HDFC Small Cap Fund: A Smart Investment or a Risk Trap? Indian small-cap universe witnessed an incredible bull phase in the first half of 2024, however, a sharp correction in the second half of the year has left everyone wondering if they missed the bus.

Mar 28, 2025

Most Popular

Manufacturing Mutual Funds Shine. Are they Worthy of Your Investment Portfolio?Currently contributing around 17% to the GDP, the manufacturing sector is expected to grow to 21% in the next 6-7 years.

May 06, 2024

6 Equity Mutual Funds to Benefit from India’s Defence SectorThe potential to benefit by sensibly taking exposure to defence sector stocks is huge!

Apr 17, 2024

Top 5 Mutual Funds with High Exposure to EV RevolutionThis article will evaluate the top mutual funds to invest in 2024 that have a high allocation to EV stocks.

Feb 06, 2024

Top Manufacturing Mutual Funds in India to Boost Your PortfolioThis article will evaluate the top mutual funds to invest in 2024 that have a high allocation to Manufacturing stocks.

Oct 28, 2024

HDFC Mutual Fund launches HDFC Manufacturing FundHDFC Mutual Fund launches HDFC Manufacturing Fund

May 08, 2024