MUMBAI, July 7: The Securities and Exchange Board of India move to stop launching of new schemes by mutual funds has evoked sharp criticism from mutual fund circles.

The SEBI has asked mutual funds to launch new schemes only after rectifying the mistakes in the previous schemes. As a result, as many as five mutual funds - Jardine Fleming, IDBI MF, LIC MF, JM Mutual Fund and SBI MF - are being forced to defer their plans to come out with new schemes.

LIC Mutual Fund, which was scheduled to come out with its Dhanvarsha scheme on Monday, deferred the plan in the last minute. ``The last minute stoppage of schemes has put us in trouble. Only some minor problems remain. It is unfair to stop the schemes now. This is at a time when major problems are yet to be sorted out,'' said an official with a mutual fund.

The market regulator is yet to sort out the Canstar tangle where the Canbank Mutual Fund is refusing to pay the promised redemption price to unitholders. Similarly, the CRB group was given a banking licence when several mistakes were detected in the books of CRB Mutual Fund.

The SEBI move to put on hold floatation of new schemes has come at a time when the mutual fund industry is struggling to stage a turnaround. Hit by poor mobilisation and low net asset values, mutual funds had a tough time last year.

"SEBI is following a penny-wise-pound-foolish policy. It is yet to probe corporates which invested in CRB Mutual Fund,'' said a fund manager.Mutual fund collections have turned buoyant in the current year with the aggregate mobilisation for the first six months crossing at Rs 3,000-crore mark. This collection has been done through 26 schemes which have been launched in the period January-June.

Compared with the buoyant trend in the current year, 1996 was dismal period with total collections aggregating only Rs 4,700 crore for the full year. The latest SEBI move is expected to hit the fund mobilisation plans of mutual funds.

Sebi has also decided that action will be taken against mutuals who fail to submit quarterly compliance reports on time. So far, 26 funds have given quarterly reports for the quarter ended March 1997. The other 11 have been given time upto July 15 for the same. For the quarter ended June 1997, the last date for submission is July 31.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.