SEBI Imposes Fine On SBI, LIC, BoB For Not Complying With Mutual Fund Norms

On 14 August, the Securities and Exchange Board of India (SEBI) imposed a penalty of Rs 10 lakh each on three public sector financial institutions- SBI, LIC and Bank of Baroda- for not complying with the mutual fund norms.

SEBI observed that State Bank of India (SBI), Life Insurance Corporation of India (LIC) and Bank of Baroda (BoB) are the sponsors of SBI Mutual Fund, LIC Mutual Fund and Baroda Mutual Fund, respectively, and they also hold more than 10 percent stake each in these mutual funds.

In addition, LIC, SBI and BoB are also sponsors of UTI AMC and hold more than 10 percent stake individually in the asset management company (AMC) and trustee company of UTI MF.

This is not in conformity with the requirement of mutual fund regulations, SEBI said in three separate orders.

The regulator amended the mutual fund regulations in March 2018, wherein a shareholder or a sponsor owning at least 10 percent stake in an AMC is not allowed to have 10 percent or more stake in another mutual fund house operating in the country.

Entities not in compliance with the requirement were given time up to March 2019 to comply with the requirement.

UTI AMC is promoted by four public sector financial institutions as sponsors (SBI, LIC, BoB and Punjab National Bank) with each of them currently holding an 18.24 percent stake in the fund house, while private equity firm T Rowe Price International holds 26 percent stake in UTI AMC.

SEBI noted that the three entities have not denied the fact that they have not complied with the provisions of MF regulations although they stated that the IPO (initial public offering) process for divestment of their shareholding in UTI AMC has been initiated and sale of its stake in UTI Trustee company is in the process of finalisation.

They further said the IPO of UTI AMC will be completed by September-end.