Currently, all schemes of a mutual fund can invest up to 10 per cent of the paid up capital of a company. Any investment above 15 per cent will automatically trigger the takeover code. Mutual funds have asked the Sebi to increase this limit so that funds which have a larger investment portfolio can invest more in a company without triggering the takeover code.

On the other hand, individuals and corporate bodies can acquire 15 per cent stake in a company without attracting the takeover code. ``Why should mutual funds be restricted with the 10 per cent limit. MFs should be allowed to invest up to 15 per cent of the capital as like others. If fact, there is no need for any ceiling,'' said a fund manager.

``As of now, good shares are available in the market.Such restrictions will hinder our operations,'' said another fund manager. The demand from mutual funds has come at a time when fund mobilisation by MFs has started shooting up.

Mobilisation of funds through this route has jumped by 82.20 per cent to Rs 8,762 crore during the first quarter (April-June) of 1999-2000 from Rs 4,809 crore in the last quarter (January-March) of 1998-99. Redemptions and repurchases by mutual funds have, in fact, fallen to Rs 4,362 crore during April-June 1999 as against Rs 4,364 crore in the previous quarter.

Mutual funds, under the umbrella of the Association of Mutual Funds in India (AMFI), have also opposed the Sebi proposal to initiate regulation in investment in unlisted and unrated securities.

Sebi wants to regulate the investment limits up to which a mutual fund can make investments in unlisted and untraded securities. However, mutual funds have contended that the decision to invest in unlisted or untraded securities is an investment decision by the mutual fund andshould not be regulated. ``Sebi's view is that the regulator should step in as public money is being invested in such securities. There should be accountability and transparency,'' said a fund manager.

Earlier, Sebi officials and the Amfi had reviewed the prudential norms of the industry which included the need for condensation of the offer document, regulating investments in unlisted and unrated securities, regulation of money markets mutual funds and facilitating tax concessions for pension fund to be launched by the fund industry. Some of the other developments in the capital market regarding the current market state were also discussed.In relation to changes in prudential norms it was discussed the extent to which a particular scheme can invest in any particular company. The current norm is that total of all schemes of a mutual fund can invest in 10 per cent of the paid up capital of the investing company and not more than the 10 per cent ceiling as it triggers the takeover code.