Securities and Exchange Board of India (SEBI) may tighten existing asset valuation norms, which guide mutual fund (MF) investments to shield investors from risks of capital erosion in debt-oriented mutual funds and to protect asset management companies (AMCs) from unwarranted redemption pressure.
In the meeting held between SEBI and MF industry body Association of Mutual Funds in India(AMFI), Ajay Tyagi, Chairman of SEBI said, “Sebi has reviewed the existing valuation provisions to make them more reflective of the realizable value, to bring in uniformity and consistency in approach, increase robustness of the process and address possible loopholes and misuse of the provisions”.
As per the liquid schemes of SEBI, the average holding in liquid instruments was less than 5% of assets under management(AUM )as compared to an average net redemption in these schemes of around 19%. A certain element of self-discipline by the industry could have averted in such a situation, said Tyagi.
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However, while making an investment, the AMC must take into account their mandate and organizational structure, he added.