Rating for MF income funds mooted

Currently banks do not provide mutual funds line of credit as RBI guidelines requires a security for offering the credit, which cannot be provided by mutual funds as the assets are held in the form of trustee property.

Expressing concern over lack of interest in mutal funds by investors CII said despite growth in the mutual fund industry, it is still not a popular investment by majorityof investors.

In order to restore confidence among investors for mutual funds, the CII paper said there should be more transparency in the information provided by the funds. “Mutual funds must gear themselves for better information sharing with present and prospective investors,” it said adding that they (investors) should be treated as owners and high degree of credibility must be developed for the information being shared.

There has to be a minimum format for information sharing at least on a quarterly basis, it said. “The government/regulatory authorities must put their weight behind this requirement of information sharing and they should be strict with those who mislead or even attempt to mislead,” CII suggested.

The paper said the tax benefits under Section 88 of Income Tax Act should be extended to all the schemes, equity and income, promoted by mutual funds. At present the benefit of tax rebate is allowed only in tax savings schemes. CII has also suggested that tax incentives should be linkedto inflation.