Madhabi Puri Buch stated during the launch of the Association of Mutual Funds in India’s new office in Mumbai’s Bandra-Kurla complex that if the AMFI fails to adopt self-regulation measures, Sebi will have to step in to protect investors.
Madhabi Puri Buch, chairwoman of the Securities and Exchange Board of India (Sebi), said on Tuesday that while the mutual funds’ sector is regarded “safe,” the industry has to develop an ethics council because the largest danger to growth is individual misbehaviour.
“As an industry, we have a very strong foundation today.” It is now time to construct a superstructure on top of this. “I believe the only risk to the industry is individual misconduct…if we find it, unfortunately, as a regulator, we must intervene,” Buch remarked at an event.
Buch stated that the new AMFI ethics committee will be able to take self-regulatory action against persons who are found to be involved in misbehaviour such as front-running and insider trading.
“It will not have judicial powers, but will be a voluntary industry alignment to work for the collective good.” And if it means the ethics committee needs to contact someone and say, “This is bad behaviour, and we will all have to pay for it,” that is due to its voluntary character. If that entity replies “We don’t care,” it is free to depart AMFI, according to Buch.
Buch stressed that the mutual funds’ industry is based on solid foundations and that the flaws identified during the epidemic time have been resolved. She believes the business has the potential to grow from its current size of Rs 40 lakh crore to over Rs 100 lakh crore.
