Welcoming Sebi?s slew of measures to re-energise the capital market, finance minister P Chidambaram on Friday promised to come up with more steps by early September to revive investor sentiment and consider the regulator?s request of allowing mutual funds under the Rajiv Gandhi Equity Savings Scheme (RGESS).
?There are a number of suggestions which are under consideration by the government,? Chidambaram said, adding that he has discussed these proposal with Sebi chairman UK Sinha on August 14.
?The examination by the government and Sebi is likely to be completed in the next two weeks. I have requested chairman, Sebi, to schedule another meeting of the board in early September when some more decisions can be taken on the suggestions that are under examination,? he said in a statement.
The government has also taken note of the Sebi recommendation that the RGESS should also ?provide for investments in equity schemes of MFs which have the securities allowed under RGESS as the underlying?, he said.
According to the budget announcement, investors will get a tax break of up to Rs 50,000 for ?direct investment? into shares under the RGESS. Though Sebi had requested the government to include equity mutual funds under the RGESS, the finance ministry under Pranab Mukherjee had ruled it out on the grounds that it would not be direct investment into equities.
Chidambaram has now asked the department of economic affairs, capital markets division, to examine the Sebi recommendation. “I expect that it would be possible to take a decision shortly,” he said.
On Thursday, Sebi announced a booster dose for the mutual fund industry by raising the total expense ratio by 30 basis points if the units are sold in tier-II cities and allowed freedom in managing the expenses. The regulator also allowed online application for initial public offerings and almost doubled the minimum application size to Rs 10,000-15,000 from the present Rs 5,000-7,000. Sebi also eased rules for companies by reducing the free float limit to Rs 3,000 crore from Rs 5,000 for follow-on offers, allowed them to offer 5% discounts on qualified institutional placements and allowed rights issues to meet the mandatory public holding of 25% by June 2013.
?These measures will stimulate financial savings among households as well as give a fillip to the mutual fund industry. More and more households should be encouraged to save in financial instruments rather than in gold,? Chidambaram said.
