Sebi directs fund houses on NOCs

Mumbai, Dec. 11: Making it easier for the mutual fund investors to switch their distributors, the market regulator, Sebi, on Friday said that it is doing away with the practice of obtaining a no objection certificate (NOC) from existing distributors.

In a circular to all mutual funds and asset management companies (AMCs) the market regulator said, “You are advised to ensure compliance with the instruction of the investor informing his desire to change his distributor and or go direct, without complleing that investor to obtain an NOC from the existing distributor.”

The regulator said that MF industry body, the Association of Mutual Funds of India (AMFI) in September 2007 mandated that AMCs will act on instruction of the investors if they desire to change their distributor.

“It appears that this mandate is not being followed by the mutual fund industry...Some AMCs are insisting on the investor procuring a NOC from the existing distribtuor for this switch over,” Sebi said.