May 16th, 2008 
krishna Securities and Exchange Board of India (SEBI) is planning to amend the guidelines for new fund offerings (NFO) of mutual funds. The plan is to draft a proposal suggesting the offer document should have to be bifurcated. The first part would deal with the funds’ investment philosophy and the pattern of the fund. The second part would have additional information which would include the details of the asset management company and the trust. It would also define the duties and obligations. It has been observed that investors find it difficult to read and understand bulky offer documents filed by mutual funds for new fund offerings. It has been decided to make them simpler and leaner which would be easy to understand for investors and also it would be less time consuming. There are many other benefits like it would reduce the size of the offer document and will make it a lot more user friendly. Experts for the mutual fund industry welcome this proposal. The basic information related to investment, objective, philosophy and risks involved in the fund would be given to the investor before investing and the same would be in much more precise manner. It would help investor understand the fund as to what the fund is all about and what are the risks involved in it. It also would help save time in reading the whole offer document. The regulator is also working to simplify the Initial public offering documents as well so that fund raising and investments across asset classes should be simpler and faster. The regulator is also about to propose fast track issuance of debt instruments by the listed companies. It is also planning to cut the filing fee for mutual funds to 0.005% of the amount raised in the new fund offering which would be subject to a minimum of Rs 1 lakh and a maximum of Rs 50 Lakhs. Adding to this SEBI has also planned to slash the registration fees payable by mutual funds from Rs 50 Lakhs to Rs 25 Lakhs.
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