'Improvement dramatic in mutual fund schemes,' says Madhabi Puri Buch

The capital market regulator, the Securities and Exchange Board of India (Sebi), looks for dramatic improvement in mutual fund schemes.

"In mutual fund schemes, the improvement is even more dramatic... pendency in the 175 watermarks is down to six", the SEBI chief said in a press conference, adding that in terms of pendency of registration of applicants (new mutual funds), pendency is down. The ageing "isn't that dramatic", she added.

The underlying reason is that the net-worth requirement of the applicant is not being met or they are awaiting approval from some other regulator, she said.

"On the AIF side, similar patterns, 70 pending items down to 40... ageing sees a dramatic improvement, from 40 items down to zero," Buch added.

Around Rs 3,500 crore of interest value of funds has been released into the system, on account of improvements we have brought into the system, said SEBI chief Buch.

Last week, the SEBI announced that a separate sub-category for ESG investments would be allowed, and fund houses can launch various strategy-based funds within the category.

However,  the regulator further clarified that a minimum of 80 per cent of the total assets under management (AUM) of ESG schemes would have to be invested in equity & equity-related instruments of that particular scheme strategy.

The remaining investment portion shall differ from the scheme's strategy. "Mutual Funds shall endeavour to deploy a higher proportion of the assets towards the scheme's strategy under the ESG theme and make suitable disclosures," said the circular.

Regarding investment criteria, the ESG schemes are currently allowed to invest only in companies with comprehensive Business Responsibility and Sustainability Reporting (BRSR) disclosures. 

As part of the latest development, ESG schemes have been allowed to invest at least 65 per cent of their AUM in companies reporting on comprehensive BRSR and providing assurance on BRSR Core disclosures.