chairman Tuhin Kanta Pandey on Friday warned mutual funds to tread carefully in microcap stocks and low-rated bonds.
Speaking at an event organised by the Association of Mutual Funds in India (AMFI), Pandey said, “While there is a need to diversify beyond blue chips, mutual funds, as a retail product, should exercise caution while investing in micro-cap or debt-papers in bespoke deals. Maintaining proper documentation for such investment decisions ensures transparency and sound due diligence.”
SEBI also plans to incentivise first-time women investors. “Financial inclusion will remain incomplete unless women are equally represented. We are envisaging an additional distribution incentive for investments from first-time women investors,” he said.
The regulator has already proposed incentives for distributors to attract new investors from tier-2 and tier-3 cities to encourage investors.
Pandey also flagged operational risks, including fraudulent redemptions by impersonators. “As fraudsters grow more creative, we must remain vigilant. Sharing such modus operandi across AMCs and RTAs is essential. In this battle, speed of information is our greatest weapon,” he said.
The regulator is also reviewing the categorisation of mutual fund schemes to allow greater product innovation and reduce portfolio overlaps. In addition, it has scrapped more than 52 reporting requirements for asset managers as part of compliance simplification and plans further easing of rules over the coming months.
The SEBI chief flagged growing reliance on technology as another concern. “As more investors interact digitally, even a single breach can cause lasting damage to investor confidence. Protecting that data is as important as protecting their money,” he said, while reminding fund houses that outsourcing does not dilute their accountability.