Waiting for a license to start a mutual fund business? You might have wait for a good three years. And that’s not all; the waiting period seems all the more long and stretched when there are no reasons given for the delay nor is the application for a license rejected.

 

The Securities and Exchange Board of India (SEBI) is yet to clear 25 applications for a mutual fund business license, where the applicants are waiting for more than 3 years now.

 

Mahindra and Mahindra Financial Services, India Infoline and Indiabulls Financial Services are among the 25 companies waiting for over three years for markets regulator’s nod to start their mutual fund business. There has been no communication to explain the delay.

 

The business plans of many of these companies are stuck, as they can neither scrap the project nor proceed with it since they have invested capital and hired people. And interestingly there is no specific time period marked by SEBI to grant a mutual fund license; but instead it has imposed on mutual fund companies on the other hand, to launch a scheme within six months of its (SEBI’s) approval for scheme(s).

 

We believe that though SEBI is right in being selective of granting mutual fund licenses as investors’ money is involved, it should clarify distinctly to an applicant whether a particular license will be granted or not. This would help in optimum utilization of resources for the companies involved.

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