Sebi fines SBI, LIC, Bank of Baroda for violating mutual fund norms

live bse live nse live Volume Todays L/H More × Markets regulator Sebi on August 14 imposed a penalty of Rs 1000000 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% stake each in these mutual funds. In addition, LIC, SBI and BoB are also sponsors of UTI AMC and hold more than 10% stake individually in the asset management company (AMC) and trustee company of UTI MF. The regulator amended the mutual fund regulations in March 2018, wherein a shareholder or a sponsor owning at least 10% stake in an AMC is not allowed to have 10% or more stake in another mutual fund house operating in the country. Entities not in compliance with the requirement was 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 (PNB) -- with each of them currently holding an 18.24% stake in the fund house, while private equity firm T Rowe Price International holds 26% 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. Sebi, in the orders, said the entities have violated the provision of mutual fund norms and are liable for penalty. Accordingly, the regulator has imposed a fine of Rs 1000000 each on them. In December 2019, it directed the three entities to dilute their stake to below 10% in UTI AMC by December 2020. In this regard, the regulator said "the proceedings initiated against the entities wherein order has been passed by Sebi's whole time member and the present adjudication proceedings are two separate proceedings and does not have bearing on one another." It had added that Sebi may initiate action against the entities for the non-compliance with the provisions of mutual fund norms.