The Capital Market regulator Sebi on Wednesday decided to ease profitability criteria for becoming a mutual fund sponsor with a view to facilitating innovation and expansion in the Mutal Fund (MF) sector. The regulator has also decided to segregate and ringfence assets and liabilities of mutual fund schemes, Sebi said in a statement after its board meeting. This is in addition to the existing requirement of segregating bank accounts and securities accounts.

The Sebi board also approved proposals including dispensing with the requirement to issue physical unit certificates, reducing maximum permissible exit load and reducing the timeline for payment of dividend. Also, the board cleared a proposal for permitting other modes for payment of dividend and providing clarity with respect to payment of interest and penalty in case of delay in dividend payment.

With regards to sponsor eligibility, Sebi said sponsors that are not fulfilling profitability criteria at the time of making application, will also be considered eligible to sponsor a mutual fund. This is subject to having a net-worth of not less than Rs 100 crore for the purpose of contributing towards the networth of the Asset Management Company (AMC). It, further, said networth of the AMC has to be maintained till the time AMC makes profit for five consecutive years.

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