The Securities and Exchange Board of India (Sebi) has decided to ensure that investors of CRB Mutual Fund do not suffer any loss, in light of the serious trouble that the sponsor- CRB group has got into.

According to Sebi sources, the watchdog body is currently examining legal implications of any action that it can take in the matter. Among other solutions, Sebi is examining the implications of changing the asset management company are being examined. The mutual fund regulations, 1997 do not cover the instances which are currently unfurling in the CRB group which floated the fund. Although there is just one scheme in operation- the Arihant Mangal scheme floated in 1994, the assets under the management are to the tune of Rs 229.25 crore as of March 31, 1996. It is believed that very few retail investors had invested in the scheme while a major part of the corpus was mopped up by corporates. Sebi is using its general regulatory power to investigate the matter. Sources said, fortunately, the regulator had debarred the fund from floating any more schemes after an inspection in 1995 which revealed irregularities.

The new mutual fund regulations hold the trustees of a mutual fund responsible in event of any malfunctioning by the fund. The role of the trustees in this matter will also be investigated. However, observers feel that a a damage control exercise would prove futile if the sponsor has gone bankrupt.

Arihant Mutual is a closed-end equity growth scheme listed on the bourses. Interestingly, it is one scheme whose market price has been higher than its net asset value (NAV) during most of 1996.

While the NAV has come down steadily from Rs 9 in the beginning of January 1996 to Rs 6 level in January 1997, the market price moved between Rs 9-11 throughout 1995 and 1996. It has fallen to Rs 5 only in May this year. The balance sheet of the scheme as on March 31, 1996 shows that the 85 per cent of the funds have been invested and most of these are in equity instruments as per the objective of the scheme.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.