SEBI Board Meeting Updates: SEBI Enhances Requirements For Portfolio Managers, Issues New Default Disclosures Norms  

• Bankers are not uncomfortable with this. They always welcomed it.
• Don't think banks would be unduly worried.
• SEBI's move more or less coincides with the review period of the RBI too.
• Both regulators seem to be working together.

ASK Investment Managers’ Prateek Agrawal said that the increase in signing up amounts for new investors from Rs 25 lakh to Rs 50 lakh will reduce the pool of investors available for the portfolio management industry.

“This pool of investors was already narrow, about 3-4 lakh people qualified at the Rs 25 lakh limit,” Agrawal, the chief investment officer at ASK, said. “With the limit at Rs 50 lakh, the pool really shrinks.”

The increased networth criteria for portfolio managers will, however, have little impact.

“The networth criteria implies that more serious players come in rather than fly-by-night operators. This has little impact on people managing Rs 500 crore and more. For smaller guys, they've been given three years so it should be okay for them as well.”

The top 1,000 listed companies by market capitalisation will be required to include business responsibility reporting as part of their annual reports. Earlier, this was only applicable to the top-500 listed firms.

The board of Securities and Exchange Board of India is conducting its periodic meeting to discuss a host of issues. Chairman Ajay Tyagi will be addressing the media to announce the decisions taken at 4:30 p.m.

One of the main items of the agenda is streamlining the rights issue process.

The market watchdog may take a decision on a proposal to reduce the time taken for rights issues to around 31 days.

The regulator had come out with a consultation paper on the mode of fundraising in May over the rights issue. In the paper, SEBI proposed to reduce the overall time taken for rights issue as well as to make the application and allotment process more efficient.

Currently, the rights issue process takes 55-58 days from the time a company decides to launch the issue till the listing.

The regulator is of the view that there is a need to reduce the timelines—both in the pre-issue opening phase and after issue closure—such that issuers and shareholders benefit from process efficiencies.

PMS Recommendations

The other issue likely to be discussed is increasing the minimum investment limit for portfolio managers to Rs 50 lakh from Rs 25 lakh currently.

Earlier a SEBI working group had proposed a number of changes to make portfolio management services more transparent and investor-friendly.

The group recommended increasing the net worth criteria to Rs 5 crore from Rs 2 crore. It also suggested changes in the use of nomenclature for regulatory reporting, client reporting and disclosure documents.

Other than that, it also suggested changes in portfolio managers charge an exit fee.