Global scenario not rosy, will impact MF sector: SEBI official

Kolkata, Feb 15 () The ongoing tension between theUS and China, which has been affecting the global trade, willhave its impact on the emerging markets and will not spare themutual fund (MF) industry too, a Sebi official said onSaturday.

The amount of liquidity of the US economy is beingsucked out as the Federal Reserve has been "withdrawing USD660 billion per year", Sebi's whole-time member G. Mahalingamsaid.

"This will definitely have an impact on the emergingmarkets and will not spare the MF industry. The globalscenario is not rosy," he said at a programme organised byIndian Chamber of Commerce here.

The official of the Securities and Exchange Board ofIndia said that liquidity is an important benchmark.

"There could be credit or operational risk. More riskmanagement guidelines will be forthcoming as the capitalmarkets regulator will discuss on these issues," he said.

Mahalingam said prudent management is required for thesustainability of the mutual fund industry on a long-termbasis.

"Sustainability is required. The MF industry isgrowing at 21-22 per cent and this growth rate will not bethere forever. It will come down," he said.

Asking whether the MF instruments are competitive ascompared to bank deposits, he said, "Safety of the investmentsis equally important and this feature has to be in-built."

The MF industry should leverage techonologies andreach out to retail investors beyond metro or tier-I cities.

Mahalingam ruled out the possibility of using mutualfunds as payment instruments in India in near future as it isdone in some other countries.

He said that there is "a credibility issue" in the MFindustry which can be addressed through awareness drive.

N S Venkatesh, chief executive of the Association ofMutual Funds in India said that the growth of assets undermanagement (AUM) in the industry is expected to be flat thisfiscal. dcBDC BDC