The new framework will have policies regarding risk management incorporating a risk management culture within the organization, and principles for identification and management of risk at the level of MF schemes and overall functions of AMCs (asset management companies), its executive director SV Murali Dhar Rao said.
“In view of changes in the landscape of the MF industry and financial markets in general, SEBI is in process of issuing a revised risk management framework for MF (which will) cover the aspects of governance of risk management framework including roles and responsibilities of Board of Trustees, Board of AMC, management and key personnel,” Rao said.
He reiterated that the pipeline of other proposals being worked on includes ways to increase confidence in the corporate bond market and modalities for the same are being finalized now. A limited purpose clearing corporation (LPCC) for clearing and settling repo debt transactions in corporate debt securities will be launched with a share capital of Rs 150 crore and AMCs will contribute as per their assets under management, he said.
It is also looking at debt schemes to be classified in terms of potential risk matrix and determine the risk profile of a scheme by December 2021 onwards, he said.
Rao said the advantages of MF investing include transparency, flexibility, diversification and cost effectiveness, but said the industry has a huge headroom to grow. He said the overall AUMs of MFs in India is only 12 per cent of the GDP as against 63 per cent global average, while emerging market peers like Brazil (68 per cent) and South Africa (48 per cent) are also higher.