New MF Lite Framework To Bring More Entrants On Relaxed Regulations: Deepak Shenoy Of Capitalmind

The newly introduced 'MF Lite Framework' for passively managed schemes will bring more entrants into the mutual fund industry, according to Deepak Shenoy, founder and chief executive officer at Capitalmind.

"What it does is introduce the capability for more entrants to come into the MF industry and offer only passive funds," said Shenoy in an interview with NDTV Profit.

The Securities and Exchange Board of India, in its board meeting on Monday, introduced a new mutual fund framework for passively managed schemes.

The newly launched framework by SEBI intends to promote ease of entry, encourage new players, reduce compliance requirements, and increase penetration, according to a circular released by the market regulator. It will also enhance market liquidity, facilitate investment diversification, and foster innovation.

The disclosure requirements may come down for passive mutual funds, Shenoy said. "So there is a better system in place in terms of less disclosure and simpler operating processes for passive MF."

The revenue for brokerages will take a slight hit, he said. However, in the longer term, this is a large enough market for brokers to earn large sums from their core businesses, added Shenoy.