MFs seek clarity from Sebi on scheme split plan, flag risks

Mutual funds are not keen on the idea of a new scheme when an existing one crosses ₹50,000 crore in AUM

- Srushti Vaidya

Mutual fund (MF) houses have sought clarity from the capital markets regulator on its proposal to allow them to launch an additional scheme once the assets under management (AUM) of a particular scheme crosses ₹50,000 crore.

As per an 18 July draft circular of the Securities and Exchange Board of India (Sebi), the older scheme will then have to stop receiving subscriptions.

The draft paper had invited comments until 8 August.

"Even though the circular says that the existing scheme will have no new inflows, for now it is not clear what will happen to the existing systematic investment plans (SIPs); whether they would be allowed to be in the same scheme or not," said a person from the mutual fund industry on the condition of anonymity. "We need to get more clarity on that."